MINNEAPOLIS (AP) — Deere & Co. said its first-quarter net income rose almost 5 percent, but it projected a slowdown in sales of farm equipment this year.
High crop prices in recent years have put money into farmers' pockets and driven a boom in demand for Deere's tractors and other motorized farm gear.
But Deere said Wednesday that demand for farm equipment is "moderating," and it expects sales of its agriculture and turf gear to fall 6 percent this year as farm incomes decline compared to last year. It's expecting the slowdown to be especially pronounced for sales of larger equipment.
Overall, Deere said sales of farm and construction equipment will fall 3 percent this year, and will fall 6 percent in the second quarter. Its profit guidance for the year was unchanged at about $3.3 billion.
It said sales of construction and forestry gear will rise about 10 percent this year as the economy recovers and more houses are built in the U.S.
"Even in the face of moderating demand for agricultural equipment, Deere is well-positioned to deliver solid performance," Chairman and CEO Samuel R. Allen said in a prepared statement.
Shares of the Moline, Ill.-based company fell 60 cents to $86.86 in morning trading.
For the quarter that ended Jan. 31, Deere earned $681.1 million, or $1.81 per share, up from $649.7 million, or $1.65 per share, a year earlier.
Revenue from equipment sales rose 2 percent to $6.95 billion as it raised prices, especially on farm gear.
Analysts surveyed by FactSet had been expecting a profit of $1.52 per share on revenue of $6.63 billion.
Jefferies analyst Stephen Volkmann wrote that the projected revenue declines are in line with Deere's guidance.
The first quarter "was a strong quarter, but the beat and unchanged guidance will do little to calm fears of cyclical weakness ahead," he wrote.
Including its financial services arm, Deere revenue rose 3 percent to $7.65 billion.