Deere & Co
The company also cut its forecast for full-year earnings yet again, and warned even this lower number was at risk, sending its shares down in premarket trading.
Deere said a number of factors contributed to the 38 percent decline in second-quarter results, including higher raw-material costs, the strong dollar and increased provisioning for credit losses at its finance arm.
But the big culprit was a decline in demand for its machines -- a drop that was especially dramatic outside the United States and Canada, where sales fell 30 percent.
Emerging markets had been the steroids for growth for agriculture and construction over the past couple of years, said Lawrence De Maria, an analyst at Sterne Agee in New York, and emerging markets are now dead. There's no financing.
The company's results also suffered from the performance of its construction and forestry equipment division, where the continued woes of the housing market dragged sales down 55 percent.
U.S. construction keeps surprising us to the downside, despite our being negative for more than two years now, said Robert Wertheimer at Morgan Stanley.
Deere reported a net profit of $472.3 million, or $1.11 a share, for the second quarter ended on April 30, down from $763.5 million, or $1.74 a share, a year earlier.
Sales fell 17 percent to $6.75 billion.
The results were better than expected -- but came with a big asterisk. Analysts, on average, expected Deere to report earnings of $1.07 a share, according to Reuters Estimates. But the EPS beat was driven by an unexpectedly low tax rate, De Maria said, and without it Deere would have reported a big miss.
Looking forward, Deere said it now expects to report full-year net income of just $1.1 billion -- but warned there was more risk on the downside.
The latest full-year forecast is down 26 percent from the $1.5 billion profit Deere said it expected to make in 2009 when it reported earnings in February, and down 42 percent from the $1.9 billion it said it expected to make in 2009 when it reported earnings last November.
And with the expected moderation in demand from North American farmers in 2010 as much as there are headwinds this year, the real headwinds come next year, De Maria said.
The company's shares fell 2.8 percent to $42.60 in premarket trading on Wednesday.
(Reporting by James Kelleher, editing by Dave Zimmerman)