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Deere & Co. results showed that the long drop in demand for farm and heavy equipment could slow down during 2017. The company announced that its revenue is expected to continue falling but by less than what experts on Wall Street were expecting.
On the news, shares were up over 6.5%.
For its full year that ends October 2017, the company expects a drop in sales of 1% in comparison with the drop of 9.3% it posted for the full year that ended this past month.
Analysts were expecting revenue this year of $22.7 billion, which would represent a decline of 2.9% from this past year’s $23.4 billion.
Sales at Deere have been down due to an industry wide slide in demand for farm equipment as lower prices of commodities and a market that is saturated for used equipment keeps the demand muted.
In a prepared statement, CEO and Chairman Samuel Allen said the company’s forecast represents a standard of our performance that is much higher than during downturns earlier.
With lower commodity prices and demand down for equipment, sales were weighed down during the quarter ending last month, but the decline was not as much as analysts had thought it would be.
In August, Deere said it was planning to cut $500 million in its costs by 2018. Costs and expenses overall were down 2.7% during the just concluded quarter.
For the full quarter, Deere posted $285.3 million in net income equal to 90 cents per share in comparison to $351.1 million equal to $1.08 per share, for the same period one year ago.
Sales were down 5% to just over $5.65 billion, which was better than analyst expectations of $5.38 billion.
Despite the market for farm equipment being dismal over the past few years, Deere continued to deliver for its investors through frequent management to top the profit expectations that were downbeat with reductions in costs.
Deere shares are up over 21% since the beginning of the year in comparison to a gain of 8% for the S&P 500.
The company is the standard-bearer when it comes to farm equipment and machinery and the hope for investors is the rest of the industry will also see a change in equipment demand as 2016 turns toward 2017.