(Reuters) – Deere & Co beat analysts’ expectations for third-quarter profit on Thursday as tighter pricing and cost controls shielded margins from weak demand for farm equipment, sending the company’s shares up 4 percent in premarket trading.
U.S. machine makers have managed to hold on to price increases from two years ago, a move prompted by supply chain complications and rising demand for industrial and agricultural equipment.
The higher prices have helped farm equipment manufacturers protect their profits from weaker demand for new equipment, driven by falling crop prices and high borrowing costs, which have also forced dealers to limit inventory replenishment.
U.S. farm incomes are expected to decline sharply in 2024 due to a sharp drop in commodity crop prices, higher production costs and declining government support.
To manage inventory levels and safeguard profit margins, agricultural machinery manufacturers such as Deere and CNH Industrial have adjusted their production strategies.
Deere announced in June that it would cut an undisclosed number of manufacturing jobs and reduce the number of permanent employees to keep costs under control.
According to data from LSEG, the company reported net income of $6.29 per share in the third quarter, compared to analysts’ average estimates of $5.63.
Net sales and income fell 17% to $13.15 billion.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shinjini Ganguli)
