Deere Reports 3Q Profit

Deere & Co.’s third-quarter net income jumped 15% and it boosted its outlook for the year with global demand for its equipment still strong. Deere benefited from favorable exchange rates and price increases, but most of the improvement was driven by strong sales growth. Equipment sales grew 49% outside of the U.S. and Canada. Sales rose 10% within the U.S. and Canada.

Deere generated $712.3 million in the quarter that ended July 31. That’s up from $617 million in the same period last year. Strong equipment sales helped the company’s revenue grow 22% to $8.4 billion in the quarter, up from last year’s $6.84 billion. Deere said its costs increased 23% to $7.29 billion in the quarter from last year’s $5.92 billion.

Credit Suisse analyst Jamie Cook said the Japanese tsunami proved to be a much smaller drag on earnings than expected. Earlier this year, Deere had predicted the Japanese disaster would hurt sales by $300 million, but the company said the actual impact was about $70 million.

Deere says its 2011 equipment sales should grow 25% over 2010 to $29.47 billion. That’s up from a previous forecast for 20% growth. Analysts were expecting 2011 sales of $29.05 billion, according to a poll by FactSet. The company also lifted its expectations on net income slightly, from $2.65 billion, to $2.7 billion.

The company also announced that it has completed the public unveiling of its new ag equipment for 2012 as part of the largest product introduction in the company’s 174-year history.

The company said significant improvements in power, comfort and performance are the hallmarks of the new machines including the S-Series Combines with larger corn heads and platforms; high-horsepower 4WD and track 9R/9RT Tractors; 6R Series row-crop tractors and 5 Series utility and specialty tractors.

“Across the board, we’ve increased the power and added many features to our new equipment that will make customers even more productive, wherever these machines are used,” said Barry Nelson manager of media relations for John Deere Ag and Turf Division. ◆