Deere & Co. says strong sales of its farm equipment helped boost its fourth-quarter profit by 46 percent and says it expects robust demand will lead to better results next year better.
The earnings and revenue each beat Wall Street expectations, and Deere shares climbed more than 3 percent in morning trading.
The Moline, Ill., company said Wednesday that equipment sales were up 20 percent in the quarter.
That helped Deere generate net income of $670 million, or $1.62 per share, for the three months ended Oct. 31, up from $457 million, or $1.07 per share, a year ago.
Revenue grew 20 percent to $8.6 billion from $7.2 billion a year ago. Both sales volume and equipment prices increased.
Analysts surveyed by FactSet expected earnings of $1.43 per share on revenue of $7.91 billion.
Deere said equipment sales will increase about 15 percent next year and profit will grow to $3.2 billion from this year's $2.8 billion.
"We are proud of the company's performance in 2011 and look forward to building on these gains in 2012 and beyond," Chairman and CEO Samuel Allen said in a statement. "We have great confidence in the company's future and our role in helping feed, clothe and shelter the world's growing population."
Deere's report offers an indication of how well farmers worldwide are doing. Deere said it expects farmers to have another good year in 2012 because the demand for agricultural commodities remains strong.
Deere has been rolling out new products throughout 2011 to comply with new EPA pollution regulations. As part of that, Deere has increased prices for most of its equipment, but its R&D costs have also risen considerably.
Credit Suisse analyst Jamie Cook said in a research note that's it's hard to criticize Deere's fourth-quarter performance, and the company's profit outlook for 2012 is more optimistic than expected.
Jefferies & Co. analyst Stephen Volkmann told clients Wednesday that Deere's guidance for next year is more optimistic overall. He said the outlook includes a $500 million increase in raw material costs and a 10 percent increase in research and development expenses.
For all of Deere's fiscal 2011, the company reported net income of $2.8 billion, or $6.63 per share. That's 50 percent higher than the previous year's $1.87 billion, or $4.35 per share.
In addition to agricultural equipment, Deere makes construction and forestry equipment, such as backhoes, excavators, riding mowers and leaf blowers. But construction and forestry sales represent a small portion of Deere's business compared to its agricultural equipment.
Its shares rose $2.38, or 3.3 percent, to $74.30 in morning trading after rising as high as $75.98 earlier in the session. Its shares are up 2.4 percent from their 52-week low of $59.92 in early October. They peaked over the past year at $99.80 in April.
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Online:
Deere & Co.: http://www.deere.com
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