Deere Plans to Raise Prices

Deere says it will raise its prices after missing second-quarter profit estimates amid higher freight and raw-material costs.

The company’s sales costs shot up by 35 percent in the quarter from a year ago, and it expects input costs during fiscal 2018 to be higher than its previous estimate.

Meanwhile, net sales and revenues are expected to jump about 26 percent from the previous year. The company sees a 30 percent annual increase in full-year equipment sales.

CEO Sam Allen said the issue is “being addressed through a continued focus on structural cost reduction and future pricing actions.”

The company didn’t say whether it would catch up with rising costs. And with recovering grain prices and declining crop inventories, it was a surprise that it didn’t raise forecasts for agricultural-equipment sales, but instead lowered them, a financial analyst for Bloomberg said.

Deere now sees an increase of 14 percent for fiscal 2018, down from 15 percent previously.

Allen said in the company’s earning statement that the supply-chain bottlenecks that caused problems during the previous quarter have eased because Deere worked with suppliers to raise production levels.

Sources: Bloomberg and Reuters