* Holds to forecast as farm incomes recede
* Cost controls help soften effects of moderating demand
* Shares down less than 1 percent
By James B. Kelleher
Feb 12 Deere & Co posted a
stronger-than-expected quarterly profit on Wednesday but kept
its full-year forecast unchanged, indicating the challenges the
farm equipment industry faces as commodity prices come off the
record highs of recent years.
The Moline, Illinois-based company said cost controls had
helped offset the effects of moderating demand for its tractors,
harvesters and other agricultural machinery in the most recent
Deere, the world's largest maker of farm equipment, said it
had earned $681.1 million, or $1.81 a share, in the first
quarter ended Jan. 31, up from $649.7 million, or $1.65 a share,
a year earlier.
Analysts on average expected a profit of $1.52 a share,
according to Thomson Reuters I/B/E/S.
Revenue, including from financial services, rose 3 percent
to $7.65 billion.
Deere said it still expected equipment sales to fall 3
percent in fiscal 2014 and that it would post a full-year profit
of about $3.3 billion, down from $3.54 billion last year.
Farmers are expected to throttle back on purchases of new
vehicles this year following a bumper crop that sent commodity
Analysts now expect crop receipts, which tend to correlate
with farm equipment purchases, to fall as much as 10 percent
William Blair & Co analyst Lawrence De Maria said Deere's
unwillingness to raise its forecast despite the
stronger-than-expected results reflected deteriorating farm
fundamentals, especially in North America. Deere's results for
the second half results and 2015 could be at risk, he added.
In morning trading on the New York Stock Exchange, Deere
shares, which have outperformed the Standard & Poor's 500 stock
index in recent months, were down 0.5 percent at $87.04.