Deere’s 1Q results top Street, but cuts full-year outlook

Deere (DE -4.3%) tumbles to its lows of the day after posting better than expected FQ1 earnings but forecasting its FY 2016 sales of agriculture and turf equipment to fall by 10% vs.an earlier outlook for a 7% drop, as it anticipates “another challenging year”. Golden says the first-quarter results reflect the down-turn in the global market and weakness in construction equipment sales.

The company contends all businesses remain profitable, helped by what it calls sound execution and effective cost management.

MOLINE, Ill. (AP) – Deere cut its full-year earnings forecast Friday even as the agricultural equipment maker beat Wall Street’s expectations for the first quarter. The revision implies per-share earnings of $4 to 4.20, according to analysts, which had expected the company to earn $4.24 this year. Declining oil prices have also affected its construction equipment sales.

Record harvests have led to larger surpluses and lower commodity prices, and in turn, lower farm incomes are causing farmers to be more cautious about investing in new equipment. Deere now projects company equipment sales to decline 10 percent – a larger decline than the 7 percent predicted at the previous quarter.

Net income was down ending the quarter at 80 cents per share over the quarter that ended on January 31, compared to one year ago of $1.12.

Revenue for the Moline, Illinois-based company totaled $5.53 billion, topping the $4.79 billion that Wall Street forecast.

As the global farm economy slows down, farmers are less inclined to purchase new equipment, which has hurt sales for both Deere and its rivals. Deere acknowledged Friday that executing the plan is becoming more hard in the face of steep drops in farm and construction equipment. Before this morning’s report, the consensus among analysts was 71-cents per share.

Deere’s construction and forestry equipment sales during the quarter fell 23% $1.2 billion.

Shares in the company, down 12% over the past 12 months through Thursday’s close, declined 3.4% in premarket trading.