Deere & Co. raised expectations for profits next year, anticipating that higher crop prices will lead to improving demand from U.S. farmers for its tractors and harvesting combines.
Dry weather in the U.S. this summer contributed to a less robust harvest than anticipated, as demand for wheat, soybeans and corn rose due to higher consumption of dinners and baked goods at home during the coronavirus pandemic. That helped to shrink grain stockpiles and pushed up crop prices, which have also benefited this year from rising exports including to China.
For Deere, the result is a better outlook for demand from farmers for its green-and-yellow machinery. Deere said Wednesday that it expects net income next year in a range of $3.6 billion to $4 billion. It earned $2.75 billion in fiscal 2020, which ended Nov. 1.
Shares rose 1.7% at $266.50 in pre-market trading.
The company, based in Moline, Ill., reported a 5% increase in profit for its latest quarter, despite a 1% decline in equipment sales compared with the same period last year. The company reported net income of $757 million for the quarter, or $2.39 a share, compared with $722 million, $2.27 a share, during the same period last year.
Net equipment sales, including Deere’s construction and forestry machinery, were $8.65 billion. Analysts were expecting earnings of $1.49 a share and $7.56 billion of equipment sales, according to FactSet.