By Bianca Flowers and Aishwarya Nair
(Reuters) -Deere & Co on Friday topped Wall Street profit expectations on strong sales of its tractors and precision agriculture equipment, and raised its net income forecast for the rest of the year as its order books remain robust.
Shares in the world’s largest farm equipment maker were up 3.6% in premarket trading after the company reported a 36% rise in second-quarter profit.
Net income increased to $2.86 billion from $2.1 billion a year ago. Including this quarter, the heavy machinery manufacturer has beat earnings estimates for eight of the last nine quarters
Deere expects 2023 net income in the range of $9.25 billion to $9.50 billion, higher than the $8.75 billion to $9.25 billion forecast earlier.
The industrial bellwether, a barometer for the global economy, has maintained resilient operating profit margins, despite global market volatility.
Farmers’ demand for new equipment and parts to repair aging machinery has bolstered Deere’s sales. Even though crop commodity prices continue to come down from last year’s peak, which spurred spending from growers to upgrade their fleets, executives have reiterated that order books are still robust.
The company’s precision agriculture division’s retail sales outpaced other segments with a 53% jump in revenue. Operating profit increased 105% year-over-year.
Smaller rival AGCO Corp also posted record-beating quarterly results this month and raised its full-year sales forecast, helped by strong combine sales in North America and purchases of large tractors for planting season.
Deere has leveraged price increases across its equipment lines to counter higher material and logistics costs.
The Moline, Illinois-based company has sustained margin improvements by mitigating cost pressures across its equipment divisions as well as constraints in supply chains that are only now moderating for most industrial companies.
Deere posted earnings per share of $9.65, outpacing analysts’ estimates of $8.59.
Total net sales and revenues rose 30% to $17.39 billion for the second quarter.
(Reporting by Aishwarya Nair in Bengaluru and Bianca Flowers in Chicago; Editing by Devika Syamnath, Kirsten Donovan)