(Reuters) – Deere & Co beat analysts' expectations for third-quarter profit on Thursday as tighter pricing and cost controls shielded margins from weak demand for farm equipment, sending the company's shares up 4 percent in premarket trading.
U.S. machine makers have managed to hold on to price increases from two years ago, a move prompted by supply chain complications and rising demand for industrial and agricultural equipment.
The higher prices have helped farm equipment manufacturers protect their profits from weaker demand for new equipment, driven by falling crop prices and high borrowing costs, which have also forced dealers to limit inventory replenishment.
Deere managed to keep its net income at about $7 billion in 2024 despite U.S. farm incomes being expected to decline in 2024 due to a sharp drop in commodity crop prices, higher production costs and declining government support.
Third-quarter revenue in the company's production and precision agriculture segment, which includes larger agricultural equipment, fell 25% to $5.1 billion due to lower shipment volumes, but was partially offset by realized prices.
“In response to weak market conditions, we have taken actions to reduce costs and strategically align our production with customer needs,” said CEO John C. May.
Deere said in June it would cut an undisclosed number of manufacturing jobs and reduce the number of salaried employees to keep a tight rein on costs. The company also took steps to manage inventory levels.
Deere reported third-quarter net income of $6.29 per share, compared with analysts' average estimate of $5.63, according to data from LSEG.
Net sales and income fell 17% to $13.15 billion.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shinjini Ganguli)
