Deere said weaker agricultural commodity prices have put pressure on the sale of farm equipment, leading the manufacturer to scale back production.
Weaker farm incomes have put pressure on the sale of Deere's equipment, a trend that led to fewer industrywide sales in the U.S. and Canada. As a result, the maker of agriculture and construction machinery reported a 15% drop in fiscal third-quarter profit and trimmed its equipment-sales projection for the full year. It now sees a decline of about 6%, worse than the prior prediction of a 4% drop.
"For the balance of the year, the company will be scaling back production in line with demand for our agriculture products," Chief Executive Samuel Allen said in a statement.
Deere (de) said though the agriculture economy remained in a "relatively healthy state," weaker commodity prices have led to lower income for farms. That decline is putting pressure on demand for farm equipment, especially larger models.
Equipment sales in the U.S. and Canada tumbled 8% for the quarter ended July 31, worse than the 4% decline for the other markets Deere serves. Profit and sales declined for the company's agriculture and turf business, hurt by lower shipments and higher production costs largely related to engine-emission requirements.
Overall, Deere reported a profit of $850.7 million, or $2.33 a share, down from $996.5 million, or $2.56 a share, a year ago. Net sales slid 6.4% to $8.72 billion.
Analysts surveyed by Bloomberg had projected a profit of $2.20 a share on roughly $8.72 billion in revenue.