Shares in Deere & Co made a weak start after the world's largest farm equipment group unveiled lower-than-expected profits and forecast dents to growth prospects from US dairy weakness to UK downpours.

The maker of John Deere machinery reported a rise of 13.7% to $9.79bn in sales for the August-to-October period, the fourth quarter of its financial year.

Despite "continuing global economic pressure", Deere enjoyed "positive customer response" to a record period for new products, Samuel Allen, the group's chairman and chief executive, said.

However, the boost to profits from higher revenues was eroded by higher production and administration and research costs, leaving earnings up a more modest 2.7% at $687.6m.

Short of expectations 

At the equivalent of $1.75 a share, this fell short of the $1.88 a share that Wall Street had expected.

And Deere, while saying it had "great confidence" in its prospects, forecast slower growth ahead, forecasting a rise of 4% in sales at its core agriculture business in the year to next October, down from 13% in the newly-finished year.

For construction equipment, sales growth will slow to 8% from 19%.

Full-year earnings were forecast at "about" $3.2bn, representing annual growth of 4.4%, less than half that in the latest year.

It was also below the expectations of many analysts, who have on average forecast 2013 earnings at $3.25bn.

The immediate impact in New York was to send Deere shares down 4.3% to $82.25, wiping some $1.5bn from the group's stockmarket value.

"Expectations were high coming into this report," JPMorgan analyst Ann Duignan said.

'Heavily impacted'

The weaker forecast reflected expectations of a "flat" agricultural machinery market in 2013, dragged below this year's "healthy levels" by "caution around the US livestock and dairy sectors".

Industry sales in Asia will be flat, Deere said, flagging a "soft" tractor market in India, where the late monsoon is expected to depress grains output, and uncertainty in China over the next farm subsidy framework.

In the European Union, industry sales were forecast at best staying stable, and potentially declining 5%, "due to continuing deterioration in the economy and a poor harvest in the UK," where persistent rains, having dogged the grains harvest, have hampered autumn root crop lifting and wheat sowing.

Indeed, the continent is split between countries such as France, Germany and Poland, "benefitting from favourable weather conditions", and the UK, south and south east EU countries which are proving "heavily impacted by unfavourable weather conditions".

Better prospects

The most promising market is that of South America, where farm equipment groups are expected to lift sales by 10% over the year, "as a result of favourable commodity prices and higher planting intentions".

Former Soviet Union market takings are seen "modestly higher" than last year, boosted by "positive" farmer sentiment.