* Quarterly profit of $1.75/share vs view of $1.88
* Sales rise to $9.79 billion
* Deere sees fiscal 2013 net earnings of $3.2 billion
By Nick Zieminski
Nov 21 Deere & Co, the world's largest
farm equipment maker, reported a weaker-than-expected quarterly
profit as higher manufacturing costs and other expenses cut into
earnings and a strong dollar reduced the value of international
Deere forecast higher sales and earnings for its new fiscal
year on Wednesday. Still its shares fell 3.7 percent to $82.79
in midday trading as the latest profit missed Wall Street
"Expectations were high coming into this report," said
JPMorgan analyst Ann Duignan.
Overhead costs and spending on research and development rose
by about $100 million from the previous quarter, Duignan said in
a note to clients.
R&D expenses were up about 14 percent year over year, while
selling, administrative and other costs rose 9 percent, partly
because of increased incentive compensation, according to a
Although expenses are rising faster than inflation, sales
have grown even faster, and the company needs to add staff to
support higher sales volumes, investor communications executive
Susan Karlix said on the company's earnings conference call.
"We are very mindful of our expenses," she said.
Net income rose to $687.6 million, or $1.75 per share, in
the fourth quarter ended on Oct. 31 from $669.6 million, or
$1.62 per share, a year earlier.
The result missed the analysts' average estimate by 13 cents
a share, according to Thomson Reuters I/B/E/S.
Sales rose 14 percent to $9.79 billion, with equipment
operations contributing $9.05 billion. Analysts expected sales
of $8.85 billion.
Stronger machinery sales in North America and higher prices
offset weaker international demand and the negative impact from
Moline, Illinois-based Deere said it expected flat North
American demand for farm equipment in fiscal 2013 after a strong
2012. Industry sales in euro zone countries will be flat to down
slightly, while soft Indian and Chinese economies will keep
demand flat there as well.
The company expects the strongest demand to come from South
America in 2013, reflecting a commodities boom.
Overall, Deere equipment sales will rise about 5 percent in
fiscal 2013, with earnings increasing to about $3.2 billion from
$3.07 billion in 2012, the company said.