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UPDATE 3-Deere raises 2017 forecast on strong farm equipment demand
* Sees FY 2017 equipment sales up 9 pct, from up 4 pct
* Sees FY 2017 profit of about $2 bln, up from $1.5 bln
* Q2 profit $1.94/shr vs est $1.68
* Shares touch record high
(Adds details from conference call)
By Ankit Ajmera
May 19 (Reuters) - Deere & Co raised its full-year
sales and profit forecast for the second time, as demand
improves for its farm and construction equipment, particularly
in South America, sending its shares to a record high of
The company said it expected fiscal 2017 industry sales of
tractors and combined harvesters in South America to be at the
high-end of its earlier forecast of about 15-20 percent rise,
buoyed by improving economic conditions in Brazil and Argentina.
While farmers in South America have been complaining about
low prices, they have enjoyed big gains in corn and soybean
"We’ve seen a big increase in acres and production, and that
requires equipment. If they have available funds, they are
willing to invest," said Jack Scoville, a broker at The Price
Futures Group in Chicago who has farmer clients in Brazil.
Brazil just completed a record-large soybean harvest of
111.60 million tonnes, according to U.S. Department of
A 7 percent drop in Brazilian currency on Thursday is also
encouraging farmers to sell soybeans as their supplies turn more
affordable than exports from the United States, providing them
with more cash to spend on equipment.
Latin America is Deere's third-biggest market, accounting
for about 9 percent of its total equipment sales.
Deere raised it fiscal 2017 equipment sales growth forecast
to 9 percent, from its previous forecast of 4 percent.
The company said it now expects fiscal 2017 net income
attributable to Deere to be about $2 billion, up from $1.5
billion estimated previously.
Deere's sales had taken a hit as bumper corn and soybeans
harvests drove down prices, leaving farmers with less cash to
spend on equipment.
To cope with the slump, Deere cut jobs and lowered
production of its trademark green tractors and harvesting
Net income attributable to Deere rose 62 percent to $802.4
million, or $2.49 per share, in the second quarter ended April
30, helped by higher shipments, improved pricing and cost cuts.
Excluding the gain of 55 cents on sale of partial interest
in affiliate SiteOne Landscape Supply Inc, which provides
irrigation supplies, Deere earned $1.94 per share.
Total sales and revenue rose 5.2 percent to $8.29 billion.
Analysts on average were expecting earnings of $1.68 cents
per share, according to Thomson Reuters I/B/E/S.
Deere's shares rose as much as 8.5 percent to $122.22 in
(Reporting by Ankit Ajmera in Bengaluru; additional reporting
by Michael Hirtzer in Chicago; Editing by Arun Koyyur)
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