Deere & Co shares soared to a clear record high after
the farm equipment giant raised its forecast for full-year earnings, noting "signs
of further stabilisation" in the global market, and a "strong recovery" in
The maker of John Deere machinery raised by $500m to $2.0bn
its forecast for group earnings for the year to October – a figure well ahead
of the $1.49bn expected by Wall Street, and a result which would be the best in
The upgrade reflected an increase to 9%, from 4%, in the forecast
for equipment sales for the year – including a hike to 8%, from 3%, in expected
expansion in sales of farm machinery.
Analysts had pencilled in group sales growth of 4.0%.
The revisions came as Deere reported "signs of further
stabilisation" in market conditions, after a downturn fuelled by the dent to
farm incomes from weaker crop prices.
"We are seeing modestly higher overall demand for our
products, with farm machinery sales in South America experiencing a strong
recovery," said Samuel Allen, the Deere chairman and chief executive.
and political conditions'
Indeed, the group revised to 20%, from 15-20%, its forecast
for full-year growth in industry sales of farm equipment in South America,
citing "improving economic and political conditions in Brazil and Argentina".
For North America, Deere now forecast industry sales falling
by 5%, compared with previous guidance of a decline of 5-10%.
And for the European Union, the group flagged the potential
for a flat market, or at worst a 5% decline, rather than the previous estimate
of a straight -5% number.
However, the guidance comes at a time of renewed political
tension in Brazil, after claims on Thursday that President Michel Temer had
bribed a witness, allegations that sent the real tumbling – a factor which
would, if it persists, weigh on imports, and contributions from Brazilian
operations to parent companies such as Deere reporting in dollars.
The improved market conditions helped Deere & Co report
a 5.2% rise to $8.29bn in sales in the three months to May 1, with results from
construction and forestry particularly strong, lifted by higher sales volumes.
Earnings soared 62% to $802.4m, equivalent to $1.94 a share,
excluding a gain on the sale of a partial interest in irrigation supplies
SiteOne Landscape Supply.
Deere shares jumped to a record high of $121.33 in early
deals in New York, before easing back to $120.80, a gain of 7.2% on the day.