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·         Deere warns of lower profits in 2020 on lingering trade tensions

·         Deere shares drop after tractor maker cuts forecast, citing ‘lingering trade tensions’

 

 

Deere warns of lower profits in 2020 on lingering trade tensions

 

Rajesh Kumar Singh, Reuters

November 27, 2019

 

CHICAGO (Reuters) - Deere & Co. (DE.N) on Wednesday warned of lower earnings next year after reporting a fall in quarterly profits, hurt by trade tensions as well as poor weather in the U.S. farm belt that has slowed equipment purchases by farmers.

 

The profit warning sent the company’s shares sinking 4.6% in premarket trading.

 

The world’s largest farm equipment maker expects net income of $2.7 billion to $3.1 billion next year, lower than $3.25 billion in 2019. The forecast is lower than Refinitiv’s average analyst estimate of $3.5 billion for 2020.

 

“Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment,” said new Chief Executive John May.

 

The Moline, Illinois-based company said it had undertaken a series of measures to manage costs. While it did not share the details of those measures, its research and development and selling, administrative, and general expenses are projected to decline next year.

 

Capital expenditure is also forecast to be lower in 2020.

 

Deere gets a little over half of its revenue from the United States. Sales have taken a hit in the wake of the U.S.-China trade war that has dented U.S. agricultural exports, leaving farmers struggling to turn a profit.

 

The U.S. Agriculture Department estimates that principal crop cash receipts, an important indicator for equipment demand, in 2019 will hit the lowest level in at least eight years. A sharp decline in U.S. corn exports and President Donald Trump’s ethanol policy have further pressured farm incomes.

 

Poor weather, meanwhile, has delayed the harvest in the U.S. grain belt.

 

In response to the weak equipment demand, Deere has cut production and laid off workers.

 

It expects global agriculture and turf equipment sales to decline 5% to 10% next year. Industry sales of farm equipment...

 

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https://www.reuters.com/article/us-deere-results/deere-warns-of-lower-profits-in-2020-on-lingering-trade-tensions-idUSKBN1Y11CF

 

 

Deere shares drop after tractor maker cuts forecast, citing ‘lingering trade tensions’

 

·         “Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment,” Deere CEO John May said.

·         For fiscal year 2020, Deere said it sees agricultural equipment sales falling between 5% and 10%.

·         Construction equipment sales are expected to decline as much as 15% next year, the company said.

 

Yun Li, CNBC 

Nov 27 2019

           

Shares of Deere dropped on Wednesday after the manufacturing company issued lower guidance as trade tensions continue to slow equipment purchases by farmers.

 

The Moline, Illinois-based company said it now expects net income of $2.7 billion to $3.1 billion in fiscal 2020, lower than average analyst estimates of $3.5 billion for the year, according to Refinitiv.

 

Deere said it sees agricultural equipment sales falling between 5% and 10% in fiscal year 2020. Construction equipment sales are expected to decline as much as 15% next year, the company said.

 

“Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment,” Deere CEO John May said in a statement.

 

Deere reported an adjusted profit of $2.14 per share for the third quarter, down from $2.30 per share last year. That compares with average analyst estimates of $2.13 per share, according to Refinitiv.

 

Shares of Deere fell nearly 4% in premarket trading on Wednesday.          

 

The U.S. and China have engaged in a trade war for a year and a half...

 

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https://www.cnbc.com/2019/11/27/deere-reports-lower-quarterly-earnings.html