Green Machine is back, Deere posts a big 1Q and ups outlook

Green Machine is back, Deere posts a big 1Q and ups outlook

Green Machine is back, Deere posts a big 1Q and ups outlook

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.

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.

Agriculture & Turf: The division saw sales increase 1 percent for the quarter and first six months.

Sales of construction and forestry equipment rose 7 percent in the quarter and Deere expects those numbers to jump about 13 percent for the year.

Net sales for its worldwide equipment operations were up 2% during the quarter and 1% during the first half of the year in comparison with the same two periods one year ago. The stock has climbed 36 percent in the last 12 months. The spring quarter is typically Deere's best of the year as farmers purchase equipment or replacement parts in advance of the spring planting season.

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Rates of foreign currency are not expected to create any material effect on its equipment sales for either the third quarter or full year.

The strong results are further evidence Deere is seeing further stabilization in the industry.

Industry sales of turf and utility equipment in the US and Canada are expected to be about flat for 2017. The decline is affecting both large and small equipment.

Despite Brazil's renewed uncertainty, DE sees the South America market as a standout in terms of tractor and combine sales growth this year, anticipating ~20% growth for the region. Asian sales are projected to be flat to up slightly, benefiting from higher sales in India. In comparison with performance in 2016, the outlook reflects lower losses on lease residual values, partially offset by less-favorable financing spreads and an increased provision for credit losses. The company posted earnings of $1.52 billion for 2016.

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