Deere & Co (NYSE:DE) stock rose 0.78% (As on August 16, 11:23:21 AM UTC-4, Source: Google Finance) after the company beat analysts’ expectations for third-quarter profit, as stronger pricing and cost control measures protected its margins from sluggish demand for its farm equipment. Deere maintained its 2024 net income at about $7 billion, even as sales of new machines have shrunk amid a decline in crop prices and high borrowing costs, which have also forced dealers to limit inventory restocking. U.S. farm incomes are forecast to plunge in 2024 due to a sharp decline in commodity prices, heightened production costs and shrinking government support. Deere also said it expects an improved favorable price realization in its agriculture segments in 2024 compared to its previous targets. DE reported net income of $1.734 billion for the third quarter ended July 28, 2024, compared with net income of $2.978 billion, for the quarter ended July 30, 2023. In response to weak market conditions, the company has taken steps to reduce costs and strategically align the production with customer needs,
DE in the third quarter of FY 24 has reported the adjusted earnings per share of $6.29, beating the analysts’ estimates for the adjusted earnings per share of $5.63, as per LSEG estimate. The company had reported the adjusted revenue decline of 17 percent to $13.15 billion in the third quarter of FY 24.
Moreover, Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased due to lower shipment volumes and employee-separation programs’ expenses. Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Construction and forestry sales decreased for the quarter due to lower shipment volumes. Financial services net income for the quarter decreased due to a higher provision for credit losses and less-favorable financing spreads, partially offset by income earned on higher average portfolio balances and favorable discrete tax items.
Fiscal-year 2024 net income attributable to Deere & Company for the financial services operations is forecasted to be approximately $720 million. Results are expected to be higher than fiscal year 2023 due to income earned on higher average portfolio balances, partially offset by a higher provision for credit losses and less-favorable financing spreads.