(Corrects 4th paragraph to reflect US/Canada sales forecast is
for industry, not company)
* First-quarter EPS $1.65 vs $1.40 est
* Revenue rises 10 pct
* Construction and forestry equipment sales fall 7 pct
* Shares down 3 pct
By Sagarika Jaisinghani
Feb 13 Deere & Co, the world's largest
farm equipment maker, forecast a modest increase in sales this
year despite the prospect of the biggest corn crop in U.S.
history, falling short of analysts' expectations and sending its
shares down 3 percent.
Shares of the company, which also makes excavators, dump
trucks and log harvesters, fell to $91.25 on the New York Stock
Exchange as the lower-than-expected increase in its outlook for
2013 overshadowed strong first-quarter results.
Moline, Illinois-based Deere raised its forecast for net
income in the year ending October 2013 to $3.3 billion from $3.2
billion, catching up with Wall Street's expectations.
The company said industry sales of agricultural equipment in
the United States and Canada would grow by no more than 5
percent this year.
"Deere's strong quarter and guidance raise were expected,
but the focus now shifts toward yields and corn prices," William
Blair & Co LLC analyst Lawrence De Maria said.
After the worst drought in the U.S. Midwest in 56 years last
year, farmers in the United States are gearing up to plant the
biggest corn crop in the country's history.
"Having a big crop is nice, but it means that the price will
be a little lower," Jefferies & Co analyst Stephen Volkmann
Deere on Wednesday cut its forecast for corn prices in 2013
to $5.25 per bushel from its earlier projection of $6.00.
Lower prices would mean a drop in total farm cash receipts -
a product of farm commodity prices, acreage planted, crop yields
and the amount and timing of government payments. Cash receipts
are the primary driver of U.S. farm equipment purchases.
WEAKER EUROPE, FORESTRY
First-quarter net income attributable to Deere rose to
$649.7 million, or $1.65 per share, from $532.9 million, or
$1.30 per share, a year earlier.
Analysts had expected first-quarter earnings of $1.40 per
share, according to Thomson Reuters I/B/E/S.
Total revenue rose 10 percent to $7.42 billion, ahead of the
$6.72 billion analysts had expected.
Wells Fargo Securities LLC analyst Andrew Casey said Deere's
latest forecast implied full-year 2013 earnings of $8.40 per
share, above Wall Street's expectations of $8.37.
The forecast, however, translated to a profit of $6.75 per
share for the last three quarters, below expectations of $6.97,
The United States and Canada together accounted for 63
percent of Deere's total revenue in the year to October 2012.
Deere's European sales are likely to decline this year due
to weak economic conditions and bad weather in Britain,
spokeswoman Susan Karlix said on a call with analysts.
The company, which competes with AGCO Corp and CNH
Global NV, said it expected full-year sales of
agricultural machinery to fall about 5 percent in Europe.
Higher costs and a 7 percent decline in the first quarter in
Deere's construction and forestry sales, which make up about a
fifth of the company's total revenue, also worried analysts.
"Forestry is weak and Deere is aggressively trying to get
market share in Europe," BMO Capital Markets analyst Joel Tiss
said. "They're probably losing some money or selling stuff
cheaper than they should."
(Editing by Robin Paxton and Sreejiraj Eluvangal)