Earnings Preview: Deere to report 4Q results
MINNEAPOLIS (AP) — Deere & Co. is certainly profiting from a booming worldwide agricultural market, though investors will want to know how much the farm equipment maker was held back by production problems earlier this year. They'll find out when Deere posts its fiscal fourth-quarter results before markets open on Wednesday.
WHAT TO WATCH FOR: Earlier this year, production hang-ups delayed delivery of some farm gear long enough that some farmers canceled orders because their equipment wouldn't arrive until after the harvest. The delays forced Deere to cut its revenue prediction for the year that ended Oct. 31.
Investors will be watching to see if Deere resolved those production problems, wrote Jefferies analyst Stephen Volkmann. "We believe they did and could see some modest upside to the quarter," he wrote. Judging by comments from the company, it appears that August sales were not as good as the broader industry, but September sales were better than the industry, Volckmann wrote. That suggests production issues have been overcome.
WHY IT MATTERS: After the previous quarter Deere suggested that it plans increased production in the year ahead. Analysts are predicting only modest increases in 2013 revenue and profits. Trends in the agricultural market have been favorable, so guidance could come in better than expected, Volkmann wrote.
On the other hand, pension expenses could rise in 2013, he wrote.
Moline, Ill.-based Deere is the world's largest producer of agricultural equipment, and it also makes construction and forestry equipment, including backhoes, excavators, riding mowers and leaf blowers. Since it touches so many important manufacturing markets, it has a unique look into the state of the global economy, in the U.S. and abroad.
WHAT'S EXPECTED: Analysts polled by FactSet forecast net income of $1.88 per share on revenue of $8.93 billion.
LAST YEAR'S QUARTER: Net income rose 46 percent to $670 million, or $1.62 per share. Revenue rose 20 percent to $8.6 billion.