Deere & Co is the latest tractor seller to predict a sharp
uptick in South American equipment demand this year, as it raised its profit
The tractor-making giant forecasts sales in its agriculture
segment to rise by some 3% in the 12 months from November 2016.
This will be driven by booming sales in South America, which
are projected to rise some 15 to 20%, ascribed to "improving economic and
political conditions in Brazil and Argentina".
This follows similarly positive forecasts from rivals Agco
and CNH for South American equipment prospects.
Poor US outlook
But the outlook for tractor sales elsewhere looks downbeat,
Sales for agricultural equipment in the US and Canada are were
forecast down 5 to 10%.
"The decline, reflecting weakness in the livestock sector as
well as the continuing impact of low crop prices, is expected to affect both
large and small equipment," Deere said.
Sales in the EU are forecast to fall by 5%, thanks to "low
commodity prices and farm incomes".
Tractor sales in Asia are seen flat year-on-year.
Deere was upbeat on prospects for its other segments,
forecasting total equipment sales, including in its construction and forestry
group, up 4% year-on-year.
Rising profit hopes
Deere raised its full-year forecast for net income
attributable to the company to $1.5bn, from a previous estimate of $1.4bn.
"John Deere has started out the year on a positive note
in the continued face of soft market conditions," said Samuel R. Allen, Deere
chairman and chief executive officer, noting "solid" profits despite lower
"Deere continues to perform far better than in
agricultural downturns of the past," Mr Allen said.
Agricultural equipment sales were flat year-on-year in the
three months to January 29, "with lower shipment volumes and higher warranty
costs being offset by price realization and the favourable effects of currency
Deere reported net income at $193.8m, or $0.61 per share, for
the three months to January 29.
This was down 24% year-on-year, and beat analyst forecasts
of $0.55 a share.
Net earnings were down 1.5% year, at $4.70bn, ahead of
forecasts of $4.69bn.