Deere’s Earnings Lower Than Expected

Deere & Co. is no longer “cautiously optimistic.” The company reported lower-than-expected earnings and cut its annual guidance as farmers shy away from major purchases amid uncertainty.

“Ongoing concerns about export-market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases,” CEO Sam Allen said.

Sales for fiscal 2019 are projected to increase about 5 percent. Deere previously forecast 7 percent sales growth. This was the sixth consecutive quarter in which Deere missed on earnings.

U.S.-China trade tensions have been escalating just as wet weather in the Midwest is keeping farmers out of their fields when they should be planting. Demand for soybeans used in feed is expected to take a hit from the spread of African swine fever in China. All that has prompted analysts to cut their recommendations.

Deere’s agriculture margins at 14 percent were weaker than anticipated. Operating profit in the company’s agriculture and turf unit declined compared to the prior year due to higher production and research and development costs, although that was offset by units selling at higher prices.