Deere beats expectations on Q1 – ups outlook for 2017
Agricultural and construction machinery maker Deere & Co. released its Q1 earnings report for 2017 last week, beating analysts’ expectations on earnings per share and net sales, and raising its outlook for fiscal 2017. These wins were not just preferable but necessary, given that Deere’s main market in U.S. agricultural machinery sales remains weak – not Deere’s fault, perhaps, but certainly its problem. The clearest sign of this troubled market was a fall in Deere’s profit – down 24% from the same period in the previous year.
Deere & Co. has delivered over 41% to investors over the last 12 months
SOURCE: Yahoo Finance
Samuel R. Allen, chairman and CEO of Deere & Co., made the following statement:
"Although the quarter's sales and earnings were somewhat lower than last year, all of our businesses remained solidly profitable. Deere's performance showed further benefits from the sound execution of its operating plans, the strength of a broad product portfolio and the impact of a more flexible cost structure. At the same time, we are seeing signs that after several years of steep declines key agricultural markets may be stabilizing."
Investors were largely placated by Deere’s decision to raise it full year guidance from -1% to +4% for 2017. Although the company has offered no insight into where it expects this growth to come from.
While Deere’s U.S. market remains its most important, the company has experienced better-than-expected fortunes in South America thanks to surprise improvements in Brazil. This helped contribute to Deere’s 11% rise in non-U.S. sales against 1Q2016.
Dominion holds Deere & Co. in its Global Trends Managed Fund.
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