Deere & Co. reported better than expected fourth-quarter earnings and revenue, but said it sees uncertainties in the agriculture sector, sending shares lower ahead of the opening bell.
The heavy-equipment maker earned a fourth-quarter profit of $722 million, or $2.27 a share, down from $785 million a year ago. Adjusted earnings per share were $2.14, edging out the $2.13 that analysts surveyed by Refinitiv were expecting. Revenue rose 5 percent to $9.9 billion, easily beating the $8.53 billion that was anticipated.
"John Deere's performance reflected continued uncertainties in the agricultural sector," Chief Executive John May said. "Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment."
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Sales at Deere's agriculture and turf division rose 3 percent year-over-year to $5.76 billion as higher prices and shipment volumes were partially offset by foreign exchange.
Net income at Deere's financial services unit plunged 66 percent to $90 million, partly due to challenges in the leasing business.
May added that "general economic conditions have remained favorable," leading to a record year for its construction and forestry business, where sales for all of the 2019 budget year climbed 10 percent to $11.22 billion. Sales for the unit rose 8 percent in the fourth quarter to $2.95 billion.
Looking ahead, Deere sees fiscal 2020 net income of $2.7 billion to $3.1 billion. Analysts surveyed by Refinitiv were expecting $3.47 billion.
“Despite present challenges, the longer-term outlook for our businesses remains healthy and points to a promising future for Deere,” May said.
Deere shares are up 18.4 percent this year while the S&P 500 is higher by 25.3 percent.