Deere & Co reported a stronger-than-expected quarterly profit on Wednesday, and raised its full-year outlook, citing improving business conditions including a recovery in the hard-hit market for construction equipment.
Deere, whose shares rose more than 4 percent in premarket trading, expects to earn $1.6 billion in fiscal 2010, up from an earlier forecast of $1.3 billion, thanks in part to rebounding building markets.
They're having as hard a time projecting this year as we are, said Longbow Research analyst Eli Lustgarten, referring to the new 2010 outlook -- the company's third estimate.
We knew this was going to be a good year because Deere was very conservative in its outlook for 2010 and limited its inventory and production. So now they find themselves with much stronger demand and tight supply, he added. This year's going to be a terrific year.
Deere predicted worldwide sales of its construction and forestry equipment would rise 30 percent for full-year 2010, saying U.S. construction-equipment markets are showing signs of stabilization.
But the company, the world's largest maker of tractors and harvesters, was also upbeat about agricultural markets, saying a combination of healthy farm cash receipts, solid commodity prices and low interest rates would lift sales of its distinctive green farm equipment, especially in North and South America.
Deere reported a fiscal second quarter profit of $547.5 million, or $1.28 a share, for the fiscal second quarter ended April 30, up from $472.3 million, or $1.11 a share, for the comparable quarter last year.
Sales during the quarter rose 6 percent to $7.13 billion, led by a 52 percent jump in sales of construction and forestry equipment.
Stripping out one-time items related to U.S. healthcare reform, the company said it made $1.58 a share.
Analysts, on average, expected the Moline, Illinois-based company to report a profit before items of $1.09 a share, and a net profit of $1.04 a share, on sales of $6.62 billion, according to Thomson Reuters I/B/E/S.
Deere shares were up about 4 percent at $59.40 in premarket electronic trading.
(Reporting by James B. Kelleher; Editing by Derek Caney)