Deere Signals Better Performance Ahead

Deere & Co. signaled that the long slide in equipment demand could ease in 2017 as it said revenue would continue to fall but by less than Wall Street expected.

Shares rose 6.5% to $98 in premarket trading.

For its year ending in October 2017, Deere expects sales to slip about 1%, compared with the 9.3% drop it posted for the year that ended last month. Analysts, polled by Thomson Reuters, were anticipating revenue of $22.71 billion this year, which would be a 2.9% decline from $23.39 billion the prior year.

"Our forecast continues to represent a standard of performance that is considerably higher than in earlier downturns," Chairman and Chief Executive Samuel R. Allen said in prepared remarks.

Deere's sales have been hurt by the industrywide slide in farm equipment as lower crop prices and a saturated market for used equipment pin down demand for machines. Those factors continued to weigh on Deere in the October quarter, though the sales decline was better than analysts had feared.

Deere in August said it plans to trim $500 million in costs by 2018. Overall costs and expenses fell 2.7% in the latest quarter.

In all for the quarter, Deere reported net income of $285.3 million, or 90 cents a share, compared with $351.2 million, or $1.08 cents a share, in the year-ago period.

Sales fell 5% to $5.65 billion, better than the $5.38 billion expected by analysts.

Despite the dismal market for farm machinery over the past couple of years, Deere has continued to deliver for investors by frequently managing to top downbeat profit expectations with cost reductions. Deere's stock is up 21% since the start of 2016, compared with an 8% gain for the broader S&P 500 index.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

November 23, 2016 07:55 ET (12:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.