As Deere & Co's reported profits fell by 27 percent in the third quarter, the farm machinery manufacturer warned that sales in the current quarter would fall about a third from the previous year. Still, the company bested analyst estimates and shares surged in pre-market trading.
For the three months ending July 31, Deere reported that it earned $420 million, or 99 cents a share, compared with $575.2 million, or $1.32 a share in the comparable quarter a year ago. It's per-share profit far exceeded consensus analyst estimates of 57 cents a share, according to data compiled by Zacks.com. In pre-market trading, shares of the stock were up 2.5 percent, at $46.20.
Sales in the quarter plunged 24 percent, to $5.89 billion from $7.74 billion a year ago, Deere said.
The Moline, Ill.-based company reported solid earnings amid a challenging worldwide economy, said President and CEO Samuel R. Allen. "We have seen continued benefit from strength in the U.S. market for large farm machinery and from our efforts to keep a tight rein on costs and inventories," he said. In its outlook for its fiscal fourth-quarter, Deere said it expects sales to fall 34 percent. Affecting earnings in the current quarter, estimated at 35 cents a share, "will be significant production cutbacks that are being made in line with retail demand," it said.
For the year, Deere projects sales to fall about 21 percent and to report net income of about $1.1 billion, amid the largest anticipated sales decline in 50 years, Deere said.