Deere’s quarterly profit above estimates

Deere & Co, the world’s leading maker of farm equipment, reported higher-than-expected quarterly profit, helped by international demand for large machines and a weaker US dollar, but shares slipped amid disappointment over margins.“With farmers doing well, expectations were high,” said analyst Brian Langenberg of Langenberg & Co. “When your biggest business has margins down because of raw materials prices, it’s not a surprise but it doesn’t make stocks go up.”Deere shares slipped 0.3 percent to $74.89 in early trading on the New York Stock Exchange, after earlier falling more than 2 percent. Other manufacturing sector shares were higher across the board. Deere also lowered its outlook for farm profits in Brazil, a key indicator for future equipment demand in a huge food exporting market even as it raised its full-year profit forecast. Net earnings rose 15 percent to $712 million, or $1.69 per share, in the fiscal third quarter ended July 31, up from $617 million, or $1.44 per share, a year ago. Per-share profit beat analysts’ average estimates by 2 cents, according to Thomson Reuters. Sales rose 22 percent to $8.37 billion. Equipment sales were up 24 percent to $7.72 billion, also beating forecasts, with the weak U.S. dollar adding 6 percentage points to the revenue growth. Deere said on its conference call that costs of raw materials such as steel, as well as tires and freight costs, were running ahead of its earlier expectations. It forecast input costs rising by around $700 million this fiscal year from its 2010 fiscal year.  Its quarterly sales beat by a bigger margin than did net income.International sales grew nearly five times faster than U.S. and Canadian sales in the third quarter. International equipment sales accounted for about 43 percent of total equipment sales in the quarter.Moline, Illinois-based Deere said sales of high-horsepower farm machinery were boosting its results and sales of construction equipment were improving despite weak North American construction markets. It forecast full-year net income of $2.7 billion. In May, it forecast $2.65 billion and analysts are expecting $2.71 billion.  Long-term global demand for food, shelter and infrastructure will drive sales of Deere products, the company said. From / Gulf Today