Deere lifts profit outlook as farm-equipment business booms
John Deere. raised its full-year profit forecast amid strong demand for farm equipment and the easing of supply chain woes that have dogged companies since the pandemic.
The US tractor maker lifted its outlook as it reported second-quarter profit that beat analyst estimates, citing healthy demand for farm and construction equipment and an improved operating environment. The company now expects earnings of $9.25 billion to $9.5 billion for the fiscal year that ends Oct. 31. The shares jumped as much as 6.6% in premarket trading.
Moline, Illinois-based Deere is a bellwether for the health of the agricultural industry given its position as the world's largest producer of farm machinery. Surging prices for corn, wheat and soybeans over the past two to three years have boosted agricultural incomes and helped farmers replace aging equipment, from tractors to combines. The company has also been able to partially offset recent supply chain pressures with price hikes.
"Deere continues to benefit from favorable market conditions and an improving operating environment," Chief Executive Officer John May said in a statement Friday. "Though supply-chain constraints continue to present a challenge, we are seeing further improvement."
The full-year profit forecast compares with February's view of $8.75 billion to $9.25 billion.
In the second quarter, Deere's main production and precision agriculture segment posted a 105% increase in operating profit from a year earlier, after volumes and prices rose.