UPDATE 2-Deere profit beats on strong farm equipment demand, shares jump
* Sees FY 2017 equipment sales up 9 pct, from up 4 pct
* Sees FY 2017 profit of about $2 bln, up from $1.5 bln
* Q2 profit $1.94/shr vs est $1.68
(Adds details, background, updates shares)
May 19 (Reuters) - Deere & Co <DE.N> reported a
bigger-than-expected quarterly profit, as sales rose for the
first time in more than three years on improving demand for its
farm and construction equipment, sending its shares up 7
The U.S. farm equipment maker also raised it fiscal 2017
equipment sales growth forecast to 9 percent, from its previous
forecast of 4 percent.
Deere said it now expects fiscal 2017 net income
attributable to the company to be about $2 billion, up from $1.5
billion estimated previously.
The company's sales had taken a hit as bumper corn and
soybeans harvests drove down prices, leaving farmers with less
cash to spend on equipment.
To cope with the slump, Deere cut jobs and lowered
production of its trademark green tractors and harvesting
Higher shipment volumes and improved pricing and product mix
along with cost cuts helped the company beat profit estimates
for the second quarter ended April 30.
"We are seeing modestly higher overall demand for our
products, with farm machinery sales in South America
experiencing a strong recovery," Chief executive Samuel Allen
said in a statement.
Deere said it expected fiscal 2017 industry sales of
tractors and combined harvesters in South America to increase 20
percent, up from its previous forecast of about 15-20 percent
rise, due to improving economic and political conditions in
Brazil and Argentina.
Latin America is Deere's third-biggest market, accounting
for about 9 percent of its total equipment sales.
The company also raised it full-year sales forecast for farm
equipment in the U.S. and Canada. Deere now expects sales in the
region, which together form its biggest market, to fall 5
percent, compared with its previous forecast of a decline of
Net income attributable to Deere rose to $802.4 million, or
$2.49 cents per share, in the second quarter ended April 30 from
$495.4 million, or $1.56 cents per share, a year earlier.
Excluding the gain of 55 cents on sale of partial interest
in affiliate SiteOne Landscape Supply Inc, which provides
irrigation supplies, Deere earned $1.94 per share.
Total sales and revenue rose 5.2 percent to $8.29 billion.
Analysts on average were expecting earnings of $1.68 cents
per share, according to Thomson Reuters I/B/E/S.
(Reporting by Ankit Ajmera in Bengaluru; Ediitng by Arun
((firstname.lastname@example.org; within U.S. +1 646 223 8780,
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Keywords: DEERE RESULTS/ (UPDATE 2)