Deere & Co. said Wednesday that its profit in the second fiscal quarter rose 65 percent due to strong demand for its agricultural equipment, especially in the United States, the Canada and the Brazil.
The earnings beat Wall Street expectations, and it raised its forecast of revenue from 2011.
But its shares fell $46 cents at 86.50 as Deere predicts higher costs than expected and warned the weakness of the main markets of South America.
"We have noticed this with other industry: there are now high expectations on the market,"stated Jeff Windau, an analyst for Edward Jones."."
Jefferies & Co. Stephen Volkmann analyst said in a research note that he was a little disappointed with profits before tax of Deere, and he said at a tax rate reduced earnings of Deere spurred by 6 cents per share in the quarter.
"On the whole quarter was good but not great," said Volkmann."
Deere is large manufacturer most of agricultural equipment. He also construction, forests and equipment landscaping such as backhoes, excavators, lawn mowers and snowblowers horseback leaves.
Moline, Ill., company said its net income rises to 904.3 million dollars, or $2.12 per share, in the quarter ended April 30. Located 547.5 million dollars last year, or $1.28 per share, oppressed by a 129.5 million charge related to the reform of U.S. health care.
Analysts surveyed by FactSet under $ 2.06 per share gains.
Revenue increased 25 percent from $ 7.1 billion $ 8.9 billion last year. Analysts expected 8.12 billion.
Windau said investors appear to be concerned about costs that Deere reported for raw materials, remuneration and research and development because those that were higher than expected.
Deere said materials costs are approximately 175 million in the second quarter. Costs of research and development increased by 12% and fresh administrative were 19 percent higher than the previous year.
The company raised its forecasts for tax revenue in 2011. Deere predicts now sales will rise 21 to 23%, while Japanese tsunami will increase sales of $ 300 million. Earlier this year, Deere predicted sales would increase from 18% to 20%.
"John Deere is well placed to address the growing need of the world for agricultural products, the shelters and infrastructure," said Samuel Allen, Deere Chairman and Chief Executive Officer.
Deere predicts now income net of the full year will grow to 2.65 billion in 2011. Its previous forecast was $ 2.5 billion of net income.
Society leaders predict that global sales of the agriculture and turf equipment will increase by 20% in 2011 with the continued growth of sales in health in North America and Asia. But sales in South America are expected to decrease of 5 to 10 per cent of the high levels of last year.
To help cope with the increase in demand, Deere said it plans to invest $ 80 million in new agricultural equipment plant in northeastern China to serve the region. It would be a plant for the manufacture of Deere seventh in China, two of which are joint ventures.
And Deere said the Kuhn Group will start to produce brand Presses John Deere large square bullets for the European markets after 2012.
Deere said that its third-quarter sales should be about 20% over last year.
The company said farmers in most major markets in the world see their revenues grow because demand for their crops remains high, while global stocks are relatively low. Deere predicts that the prices of crops this year will be the average well above the levels of last year.
Corn prices have more than doubled since the summer of last and reached a record level of $7.76 a bushel on April 11. The price had increased because the demand for ethanol producers and consumers overseas has increased faster than the supply. Prices fell this month here because USDA new estimates predicted corn supplies will pass this year, but prices are still close to $7 per bushel of corn.
No comments:
Post a Comment