Deere delivers profit beat, lifts outlook on strong tractor demand
By Bianca Flowers and Shivansh Tiwary
(Reuters) -Deere & Co breezed past Wall Street estimates for third-quarter profit on Friday and raised its annual net income outlook on strong demand for large tractors, combines and precision agriculture equipment.
But shares of the Moline, Illinois-based company were down 1.7%, mirroring the broader market.
With supply-chain bottlenecks clearing up, the industrial giant boosted output capacity to reduce its production backlog. However, analysts' suggest that mounting dealer inventories are diminishing investor optimism about sales growth for next year.
«Our experts caution that as supply chains normalize and high-demand continues, manufacturers like Deere (NYSE:DE) could overproduce and have larger than expected inventories if a down-cycle materializes in 2024,» Third Bridge analyst, Ryan Keeney said in a research note.
The world's largest farm equipment maker now expects 2023 net income between $9.75 billion and $10.00 billion, compared with its previous outlook of $9.25 billion to $9.50 billion, after posting a 60% rise in quarterly profit.
Deere, a barometer for the global economy, has maintained resilient operating profit margins despite volatility in markets worldwide, with demand from farmers looking for new equipment and parts to repair aging machinery bolstering the company's sales.
Executives have reiterated that order books are still robust heading into next year.
«Fundamentals are expected to continue fueling solid demand for our equipment, supported by a strong advance-order position,» Deere CEO John May said in a statement.
Robust demand for its construction equipment has also propped up margins as the United States upgrades roads, railways and other transportation
Read more on investing.com
