DEERE & Co, the world’s largest farm equipment maker, reported a weaker-than-expected quarterly profit yesterday as higher manufacturing costs and other expenses cut into earnings and a strong dollar reduced the value of international sales.
US-listed Deere forecast higher sales and earnings for its new fiscal year, but its shares fell almost four per cent in early trading.
Net income rose to $687.6m (£431m), or $1.75 per share, in the three months to the end of October, from $669.6m or $1.62 per share, a year earlier.
The results missed the analysts’ average estimate by 13 cents a share, according to Thomson Reuters.
Overhead costs and spending on research and development rose by about $100m from the previous quarter, JP Morgan analyst Ann Duignan said in a note to clients.
“Expectations were high coming into this report,” she added.
Research and development expenses were up about 14 per cent year-over-year, Deere said, while selling, administrative and other costs rose nine per cent, partly because of increased incentive compensation, according to presentation materials ahead of the company’s earnings conference call.
Sales rose 14 per cent to $9.79bn, with equipment operations contributing $9.05bn. Analysts were expecting sales of $8.85bn.
City A.M. Reporter