UPDATE: Deere Slashes 2009 Profit Estimate By 20%
18 Fevereiro 2009 - 12:41PM
Dow Jones News
Deere & Co. (DE) slashed its 2009 profit forecast by more
than 20% Wednesday as demand for its farm and construction
equipment grows weaker in the ongoing recession.
Deere, the world's largest producer of farm equipment by
revenue, ratcheted down sales expectations across all its product
lines and geographic markets.
Deere's performance is widely watched as a barometer of
conditions in global agriculture. For the past five years, Deere's
sales and profits have surged amid rising prices for farm
commodities and livestock.
But falling commodity prices, tighter credit conditions, higher
material costs and volatile currency exchange rates are putting the
brakes on the Moline, Ill., company's performance.
Deere now sees its 2009 fiscal-year net income at $1.5 billion,
21% below its November estimate of $1.9 billion. The company
expects sales to fall by 8% from 2008, compared with flat equipment
sales seen earlier.
Analysts' surveyed by Thomson Reuters estimated net income at
$1.77 billion.
Second-quarter equipment sales are expected to slip about 9%.
The company said it will refrain from offering quarterly income
guidance because of uncertainty in its markets and fluctuating
currency exchange rates.
The downward revisions were widely anticipated by company
observers after rivals CNH Global N.V. (CNH) and Agco Corp. (AG)
significantly lowered their expectations for 2009 in recent
earnings releases.
Deere expects worldwide sales of its farm machinery this year to
fall by 2% from 2008, compared with the company's earlier
prediction of a 5% increase.
The company sees North America as its strongest market for farm
machinery, predicting that retail sales will be flat to up by as
much as 5% over 2008. Sales of large tractors and combines are
expected to be a pocket of strength as commodity prices remain
healthy and fuel and fertilizer costs moderate.
Elsewhere, however, Deere widened its previous 2009 forecasts
for declining sales. Deere now expects South American sales to fall
by 15% to 20%, under pressure from drought conditions and tougher
credit conditions for equipment purchases. Sales in Western Europe
are seen slipping by 10% to 15%.
The company also predicted that 2009 sales of its construction
and forestry equipment will be down 24% from 2008 on the continued
slump in U.S. housing construction.
Sales of commercial and consumer equipment, which includes
Deere's irrigation and landscaping businesses, are expected to fall
14%.
For the fiscal first quarter, Deere posted income of $203.9
million, or 48 cents a share, down 45% from $369.1 million, or 83
cents, a year earlier, well below the company's November forecast
of $275 million. Net sales in the quarter fell 1.1% to $5.15
billion as equipment sales rose 0.6% to $4.56 billion. Analysts on
average expected earnings of 63 cents a share on equipment sales of
$4.64 billion.
Deere attributed the lower first-quarter income to higher
material costs, a stronger U.S. dollar versus other currencies and
higher-than-expected order cancellations in South America and parts
of Europe.
Deere stock was recently down 3.49% at $32.32.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
(Melissa Korn and Kevin Kingsbury contributed to this
report.)