Deere upgrades 2021 earnings outlook on improved farm equipment demand, Auto News, ET Auto


Deere expects large tractors, combines and sprayers to drive up its worldwide farm machine sales by 26% to 28% in 2021.
Deere expects large tractors, combines and sprayers to drive up its worldwide farm machine sales by 26% to 28% in 2021.

By Rajesh Kumar Singh

CHICAGO: Deere & Co on Friday upgraded its fiscal 2021 earnings forecast after profit more than doubled in the first quarter on improved demand for farm and construction machines and a higher adoption rate for its technology offerings.

The world’s largest farm equipment producer expects annual net income in the range of $4.6 billion to $5.0 billion, higher than the $3.6 billion to $4.0 billion forecast earlier.

Deere’s shares, which have outperformed the broader market with a gain of 17% since the last earnings report, opened higher and were last up 9.9% at $330.25 in early trade.

Prices for corn, soybeans and wheat have rallied to their highest in more than six years on rising exports to China and government efforts worldwide to build food stocks during the COVID-19 pandemic, making 2021 the strongest season in years for the U.S. farm economy.

High crop revenues are enabling farmers to retire debts and upgrade machinery after years of challenging market conditions, lifting sales of tractors and harvesting combines.

Deere expects large tractors, combines and sprayers to drive up its worldwide farm machine sales by 26% to 28% in 2021.

Industry sales of large agricultural equipment in the United States and Canada – the company’s biggest combined market – are forecast to grow by 15% to 20% this year.

Construction machine sales are also tipped to increase following a double-digit decline last year.

Improved equipment demand has boosted Deere’s pricing power, which together with cost control measures led to a 196% year-on-year increase in operating profit in the latest quarter.

Earnings for the first quarter came in at $3.87 per share compared with $1.63 per share last year. Analysts surveyed by Refinitiv, on average, had expected quarterly earnings of $2.14 per share.

Equipment sales rose 23% year-on-year to $8.05 billion.





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