Deere's stock falls as earnings beat but full-year outlook falls short

By Tomi Kilgore

U.S. agriculture and construction industry, company's business segment sales expected to keep falling, more than the industry in fiscal 2024

Shares of Deere & Co. dropped Thursday, after the agricultural, construction and turf equipment maker reported fiscal first-quarter earnings that were well above expectations but provided a downbeat full-year outlook, with business segment sales underperforming the industry.

The stock (DE) dropped 3.4% in premarket trading, to put it on track to open at the lowest price seen during regular-session hours since Dec. 13.

Net income for the quarter to Jan. 28 declined to $1.75 billion, or $6.23 a share, from $1.96 billion, or $6.55 a share, in the same period a year ago. But that beat the FactSet consensus for earnings per share was $5.26.

Net sales were down 8% to $10.49 billion, above the FactSet consensus of $10.30 billion, while total revenue, which includes interest and other income, slipped 3.7% to $12.19 billion but beat expectations of $11.48 billion.

Among Deere's business segments, production and precision agriculture sales fell 7% to $4.85 billion and small agriculture and turf sales tumbled 19% to $2.43 billion, as price increases failed to offset lower shipment volumes.

Construction and forestry sales inched up 0.3% to $3.21 billion, as higher prices offset lower volumes.

For 2024, Deere expects fiscal 2024 net income of $7.50 to $7.75 billion, down from $10.17 billion in fiscal 2023, and below the FactSet consensus of $8.03 billion.

The company said the large agriculture industry is currently expected to decline 10% to 15% in the U.S. and Canada and the small agriculture and turf industry is seen down 5% to 10%, while the construction and equipment industry is expected to be flat to down 5%.

For Deere, production and precision ag sales are expected to fall about 20%, small ag and turf sales are projected to be down 10% to 15% and construction and forestry sales are expected to decline 5% to 10%.

Deere's stock has gained 1% over the past three months through Wednesday while the S&P 500 has rallied 11.1%.

-Tomi Kilgore

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02-15-24 0701ET

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