But the company also lowered its forecasts for its full-year agricultural equipment sales and for the U.S. construction industry.
Deere posted a profit of
Sales in Deere's Agriculture & Turf Division, of which the Waterloo Operations are a part, fell 12 percent for the quarter and 7 percent for six months, which the company said was due largely to lower shipment volumes, the previously announced sale of John Deere Landscapes and "the unfavorable effects of currency translation, partially offset by price realization."
Operating profit was
Analysts on average had anticipated
Lustgarten attributed Deere's quarterly showing to "terrific execution, better profitability and a lower tax rate," which offset lower-than-anticipated sales in both farm and construction equipment.
"Bottom line, it was terrific execution offsetting a weak environment," Lustgarten said. "They maintained their profitability guidance amidst slightly lower revenue outlook. What you also saw was tighter control on all their expenses."
Sales fell 9 percent to
The company said its construction and forestry and financial services operations showed improvements, which Allen credited to "our broad-based business lineup."
Deere said it expected full-year sales of agricultural equipment to be down about 7 percent in fiscal 2014. Three months ago, the company had forecast a decline of about 6 percent. The company has cautioned that demand for its products would slip in most markets after a bumper crop that led to lower commodity prices.
"You've got other classic signs of a cyclical peak in a wakening marketplace," Lustgarten said when asked what to expect going forward. "We knew the first half of fiscal '14 would be fine and that came true. But, there's a softening coming. The key will be the weather this summer. You saw
Reuters reported most analysts predicting a 10 percent decline in crop receipts, which tend to correlate with farm equipment purchases.
"Although the agricultural economy remains in a relatively healthy condition, farm income is forecast to be lower than last year," Deere said in its news release. "The decline is putting pressure on demand for farm equipment, especially for larger models. At the same time, strength in the U.S. livestock sector is providing support to sales of mid- and smaller-size tractors. Based on these factors, industry sales for agricultural machinery in the U.S. and
Some investors hoped a rebound in construction demand, particularly in the U.S., would help offset that softness for Deere, which also builds construction equipment.
But Deere scaled back its outlook for that industry on Wednesday as well. The company said it expected total U.S. construction investment to grow at a 4.3 percent annual rate in 2014, down from a previous forecast rate of 6.3 percent.
Deere also said it expected 1.05 million housing starts, down from a previous forecast of 1.16 million.
Shares of Deere closed at
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