Deere & Co. recently announced a review of costs after quarterly profits again missed Wall Street estimates. Bad weather and the U.S.-China trade war were to blame for depressed sales of farm machines, the company said.
For the quarter ending July 28, sales at its agriculture and turf segment declined 6 percent year-on-year. Overall, equipment sales were down 3 percent.
The company cut its full-year earnings outlook for the second time in the past three months. It now expects annual sales growth of 4 percent.
Deere said it was reviewing cost structure and initiating a series of measures after its production costs in the third-quarter shot up by 2 percentage points from the previous quarter. Yet despite its efforts, full-year production costs are projected to be above previous estimates.
In response to weak equipment demand, in May, Deere announced a 20 percent production cut at its factories in Illinois and Iowa.
“Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions, have caused many farmers to postpone major equipment purchases,” said Chief Executive Officer Samuel Allen.
Agricultural machine makers AGCO Corp. and CNH Industrial have also slashed production to keep inventory in line with retail demand.