Deere’s 1Q results top Street, but cuts full-year outlook

Net income for the quarter fell to $254.4 million from $386.8 million. The company reported cash usage of $777.6 million from operating activities in the first quarter compared with $5Array0 million in the prior-year quarter.

“John Deere’s first-quarter results reflected the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets”, said Samuel R. Allen, chairman and chief executive officer.

For 2016 Deere expects equipment sales to decline by about 10% and second-quarter sales are forecast to fall 8% compared with the second quarter of 2015.

Sales in Deere’s agriculture and turf segment-which makes up two-thirds of the top line-slid 12%, thanks to lower shipment volumes. The farm and heavy equipment maker posted diluted earnings per share (EPS) of $0.80 on revenues of $5.53 billion. Its shares are down nearly 15 percent over the past year.

In other areas of the world, sales fell 9%, including an 11% downward effect attributable to negative foreign currency translation effects. Sales included price realization of 2 percent and an unfavorable currency-translation effect of 4 percent.

Net income attributable to John Deere Capital Corporation was $99.9 million for the first quarter compared with $133.6 million past year. Asian sales are projected to be flat to down slightly, due in part to weakness in China.

A deteriorating market in the US and Canada is taking a toll. Deere & Co. (DE) on Friday, Feb. 19, 2016 reported fiscal first-quarter profit of $254.4 million.

Incomes in the farming industry have been drying up amid an oversupply of crops that has weakened prices. And with more tough times for agriculture in the forecast, Deere may have to rely on its lesser-known finance side even more in the months ahead. AIN and Caterpillar Inc.

This beat the 71 cents per share that analysts surveyed by Zacks Investment Research expected.