Deere & Co DE-N -1.19%decrease cut its 2024 profit forecast on Thursday as farmers remained hesitant about big-ticket equipment purchases due to high borrowing rates and falling crop prices, even as its first-quarter sales and profit topped Wall Street estimates.
Shares of the world’s largest farm equipment maker were down 5.4 per cent in early trading as the manufacturer has seemingly passed its peak for robust demand.
With farmers reassessing expenses, particularly for compact tractors, Deere said it now expects net income for fiscal 2024 of $7.50-billion to $7.75-billion. This is below its prior forecast of $7.75-billion to $8.25-billion and below analysts predictions of $7.93-billion, which already marked a decline from the prior quarter.
“That’s not particularly unusual for the first year of a market correction,” said Stephen Volkmann, senior machinery analyst at Jefferies. “The lower guidance that they put out is just a factor of that lower large agriculture outlook.”
Demand for Deere’s farm equipment is expected to be weaker in Central and Eastern Europe, executives told analysts on an earnings call, as commodity markets remain disrupted by the ongoing conflict in Ukraine. Recent extreme weather conditions in the region have also impacted crop yields, which squeezed farmers’ profits.
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