Deere 2Q profit rises, but warns of cost trouble ahead

But the Moline, Ill.-based company warned that rising material costs could cut into its earnings over coming months, sending its shares down 6 percent in premarket trading.

The maker of tractors and harvesting machinery said its profit for the period ended April 30 jumped to $763.5 million, or $1.74 per share, up from $623.6 million, or $1.36 per share, during the same period last year.

Deere said sales rose to $8.1 billion from $6.9 billion a year ago. The company said its sales outside North America soared 46 percent during the quarter, dwarfing the 6 percent jump of its sales in the U.S. and Canada.

Analysts surveyed by Thomson Financial had expected earnings of $1.75 per share on sales of $7.6 billion. The earnings estimates typically exclude one-time items.

Deere has benefited from higher farm prices around the world that have been fueled by increased ethanol production. And the company is enjoying an export boom as the dollar's decline overseas makes its products cheaper in most markets beyond North America.

"Advanced offerings that help efficiently meet the world's growing need for farm products are lending strong support to our performance and are bringing John Deere quality and value to a growing global audience," said Robert Lane, Deere's chairman and chief executive.

The company said it expects third-quarter and full-year sales to rise about 20 percent, predicting $550 million to $575 million during this quarter and about $2.2 billion for the full year.

But Deere warned that rising raw-material costs and the availability of various parts and components "are expected to have an impact on operations for the balance of the year."

Deere also makes construction and forestry equipment such as backhoes, excavators, riding mowers and leaf blowers