Deere & Co., the world’s largest farm-equipment maker, raised its fiscal 2011 earnings forecast and posted second-quarter profit that beat analysts’ estimates amid increasing demand for agriculture and construction equipment.
Earnings will be $2.65 billion in the year through October, more than the $2.5 billion forecast in February, Moline, Illinois-based Deere said today in a statement. The average analysts’ estimate in a Bloomberg survey was for profit of $2.67 billion, or $6.26 a share.
Demand for farm and construction equipment is increasing as the U.S. recovers from the recession that ended in June 2009 and the world population grows. Sales of heavy equipment from planters to excavators are rising as China, India and other developing countries aim to increase productivity of farmland and construct bridges, roads and buildings for expanding cities.
“Crop prices remain elevated relative to historical averages,” Stephen Volkmann, a New York-based analyst for Jefferies & Co. who rates the shares “buy,” said in a May 13 report.
Deere said equipment sales will rise 21 percent to 23 percent in fiscal 2011, up from a previous projection for an 18 to 20 percent increase. Equipment sales in fiscal 2010 were $23.6 billion.
Net income gained 65 percent to $904.3 million, or $2.12 a share, in the quarter through April, from $547.5 million, or $1.28, a year earlier, Deere said in the statement. The average analyst estimate in the survey was for earnings of $2.06 a share. Total sales rose 25 percent to $8.91 billion from $7.13 billion a year earlier.
Deere advanced $1.04, or 1.2 percent, to $88 at 7:07 a.m. before the start of regular New York Stock Exchange trading. The shares climbed 4.7 percent this year before today.
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