Deere & Co. (NYSE:DE) reported a better-than-expected fiscal third-quarter profit, surprising investors and analysts alike. The company reported that net income rose to $1.55 cents a share in the three months through June, up from $1.53 a year earlier. That was considerable higher than the 94-cent average expected by analysts polled by Bloomberg.
The company also raised its full-year profit. The company reported that net income will be $1.35 billion in the year through October, compared with the $1.2 billion projected by the company in May. After the announcement, the company’s shares rose as much as 12 percent in New York. That was the largest surge for the company in eight years.
The results show that Deere is defying a farming recession. In the company’s earnings statement, Chief Executive Officer Sam Allen said, “Deere continues to perform well in the face of challenging market conditions. We are continuing to focus on ways to make our operations more efficient and achieve further cost reductions.” Deere is currently the world’s largest agricultural equipment maker, well known for its green-and-yellow tractors and combines.
The company forecast full-year equipment sales will fall 10 percent, increasing its previous prediction for a 9 percent decline. Overall, agricultural equipment sales are expected to be down 15 to 20 percent this year in the United States and Canada. Deere warned Friday that tractor production at its Waterloo plant will be cut through at least October. Work hours at the Waterloo facility will be down by 20 percent during its fourth quarter compared to a year ago.
Deere expects to boost pretax income by at least $500 million by the end of 2018 after cutting costs. Since 2013, Deere has cut thousands of jobs and reduced capacity at its plants. Deere has laid off about 2,000 workers since the start of the agriculture downturn. The company also reported a 16 percent reduction in its cost of sales. Even if the current agricultural downturn persists at current levels, the company believed that it can still meet the target.