Deere Cuts 2024 Profit Outlook on Lower Tractor Sales
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Deere’s fiscal second-quarter results beat Wall Street’s expectations, but the company lowered its full-year profit forecast for a second time as farmers buy fewer tractors and other equipment as they deal with declining prices for their crops.
Deere, which makes agricultural equipment, cut its profit outlook to $7 billion from a previous range of $7.5 billion to $7.75 billion. Prior to that, the company had forecast a 2024 profit between $7.75 billion and $8.25 billion.
Shares dropped more than 5% before the market open on May 16.
The U.S. Department of Agriculture anticipates that 2024 net farm income, which is a broad measure of profits, will total $116.1 billion. That’s down 25.5% from a year earlier. Adjusting for inflation, net farm income is expected to be down 27.1% this year as farmers contend with lower prices for soybeans and corn. The USDA said that lower direct government payments and increased production costs are also weighing on farmers.
Deere & Company’s Q2 2024 earnings are now available: https://t.co/CwBGPtecgZ pic.twitter.com/GowHFsuMcN — John Deere (@JohnDeere) May 16, 2024
For the three months ended April 28, Deere & Co. earned $2.37 billion, or $8.53 per share. A year earlier, it earned $2.86 billion, or $9.65 per share.
The performance easily beat the $7.86 per share that analysts polled by Zacks Investment Research were calling for.
Revenue for the Moline, Ill.-based company fell 12% to $15.24 billion. Its adjusted revenue — which excludes finance and interest income — was $13.61 billion, topping Wall Street’s estimate of $13.26 billion.
Revenue for the small agriculture and turf division, which includes certain midsize and small tractors and other equipment, fell 23% to $3.19 billion. Revenue for the production and precision agriculture unit, which includes large and certain midsize tractors, combines and other equipment, slipped 16% to $6.58 billion.
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