Deere & Co reported a much higher-than-expected quarterly profit on Wednesday as strong sales of its tractors and harvesters to farmers in the Americas offset the construction industry's continued weak demand for earth-moving equipment.
The company, the world's largest maker of agricultural equipment, said earnings rose to $996.5 million, or $2.56 a share, in the third quarter ended July 31 from $788 million, or $1.98 a share, a year earlier.
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Analysts on average expected the Moline, Illinois-based company to report a profit of $2.17 a share, according to Thomson Reuters I/B/E/S.
Total sales, including revenue from the company's financial services unit, rose 4 percent to $10 billion. The analysts' average estimate was $9.1 billion.
Shares of Deere rose 1 percent to $84.75 in trading before the market opened. At Tuesday's close, the stock was down about 3 percent this year, while the Standard & Poor's 500 index had risen about 18.8 percent.
In a statement, Chief Executive Officer Samuel Allen said the nearly 30 percent jump in earnings per share reflected "considerable strength in the farm sector, especially in North and South America."
Earlier this year, Deere lowered its outlook for fiscal 2013 revenue, saying a cooler-than-normal spring in North America had depressed sales. Some analysts worried the softness was a sign of a new normal as corn prices have retreated from the all-time highs they hit last summer.
Deere's latest results appeared to allay those fears, at least for now. But Allen said the company was continuing to keep "a close watch on costs and assets."
A number of analysts, including UBS, Barclays and William Blair & Co, have cut their outlooks and share-price targets for Deere in recent days, citing concerns that farmers will slash their capital spending because of plunging grain prices.
Deere said sales of equipment to farmers rose 8 percent during the quarter. Sales of construction and forestry equipment fell 11 percent.
(Reporting by James B. Kelleher; Editing by Jeffrey Benkoe and Lisa Von Ahn)