Deere & Co. observed a decrease in its shares on Thursday after the agricultural, construction, and turf equipment manufacturer unveiled fiscal first-quarter earnings that surpassed expectations.
However, the company offered a pessimistic outlook for the full year, with sales in various business segments trailing behind industry benchmarks.
In premarket trading, Deere’s stock (DE) declined by 3.4%, suggesting an opening at the lowest price since December 13.
The net income for the quarter ending on January 28 decreased to $1.75 billion, or $6.23 per share, compared to $1.96 billion, or $6.55 per share, in the same period the previous year.
Despite the decline, this exceeded the FactSet consensus for earnings per share, which was projected at $5.26.
Net sales saw an 8% decline, reaching $10.49 billion, surpassing the FactSet consensus of $10.30 billion.
Total revenue, including interest and other income, fell 3.7% to $12.19 billion but surpassed expectations set at $11.48 billion.
Within Deere’s business segments, production and precision agriculture sales experienced a 7% decline to $4.85 billion, while small agriculture and turf sales dropped by 19% to $2.43 billion, despite price increases failing to offset lower shipment volumes.
On a brighter note, construction and forestry sales exhibited a marginal increase of 0.3% to $3.21 billion, attributed to higher prices compensating for lower volumes.
Looking forward to 2024, Deere expects fiscal net income in the range of $7.50 to $7.75 billion, a significant decrease from the $10.17 billion reported in fiscal 2023.
This projection falls below the FactSet consensus of $8.03 billion.
The company attributed this forecast to an anticipated 10% to 15% decline in the U.S. and Canada’s large agriculture industry, a 5% to 10% downturn in the small agriculture and turf sector, and a flat to 5% decrease in the construction and equipment industry.
By segment, Deere expects production and precision ag sales to fall around 20%, small ag and turf sales to decline by 10% to 15%, and construction and forestry sales to drop by 5% to 10%.
Despite the tough outlook, Deere’s stock has gained 1% over the past three months, in contrast to the S&P 500, which rallied 11.1% over the same period until Wednesday.
