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Deere & Co. Q4 profits up 3% but below estimates

Last updated: 06:54 21 Nov 2012 EST, First published: 07:54 21 Nov 2012 EST

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Agricultural equipment maker Deere & Co. (NYSE:DE) Wednesday reported fourth-quarter earnings that missed estimates after sales outside the North America declined.

The maker of the iconic green and yellow farm equipment said fourth-quarter profit grew 3 per cent to $687.6 million, or $1.75 per share, from $669.6 million, or $1.62 per share, a year-ago. Sales rose 14 per cent to $9.79 billion.

Analysts expected the company to earn $1.88 per share on sales of $8.93 billion, according to FactSet.

Deere said demand for U.S. farm equipment kept pace with recent performance, while its construction business continued its recovery.

"Deere remains well-positioned to carry out its growth plans and capitalize on positive long-term trends, even though present global economic and fiscal concerns warrant continued caution," Deere's chairman and CEO Sam Allen said.

In the U.S. - Deere’s largest market - new farm equipment inventory rose in October to 29 per cent of trailing 12-month sales for high-horsepower, four-wheel drive tractors, according to industry data - the highest level in more than five years.

Agriculture & Turf. Sales increased 16 percent for the quarter and 13 percent for the year largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.

Construction and forestry sales increased 7 percent for the quarter and 19 percent for the year mainly due to higher shipment volumes and price realization.

Looking ahead, Deere said equipment sales are projected to increase by about 5 per cent for 2013 and to rise by about 10 per cent in the first quarter.

Deere expects fiscal 2013 profit of about $3.2 billion, up from $3.07 billion in 2012. Analysts are looking for year-end income of $3.26 billion.

The company said farm equipment sales in Europe will be unchanged or 5 per cent lower in fiscal 2013 and Asia will be little changed due to "softer" economic conditions in India and China. That may undermine the company’s effort to expand the share of sales made outside the U.S. and Canada to 50 per cent by 2018.

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