Deere gets boost from building equipment

Solid sales of its construction equipment offset a global agricultural slowdown for Deere, the company said Friday. It also raised its outlook for the year and its shares rose nearly four per cent Friday.

Deere’s most profitable business is making and selling its green tractors and other farming equipment, but with less demand for large farm equipment, Deere is relying more on its backhoes, excavators and other construction equipment to grow sales. A surge in home construction in the U.S. is likely helping. In April, builders broke ground on homes at the fastest pace in more than seven years, according to the Commerce Department.

Deere said sales of farming equipment fell 25 per cent from a year ago to $5.77 billion US in the second quarter, due to lower shipment of farm machines and the effects of the stronger U.S. dollar. For the full year, Deere expects farming equipment sales to fall 24 per cent from the year before. Meanwhile, sales of construction and forestry equipment rose two per cent to $1.63 billion and it expects them to also rise about two per cent for the year. Deere’s financing unit, which gives loans to customers to buy equipment, also improved, with revenue rising 14 per cent to $653 million.

The company said its secondquarter earnings fell 30 per cent to $690.5 million, compared with $981 million last year, but it was still better than Wall Street had expected.

The Moline, Ill., company posted net income of $2.03 per share, which easily beat the per-share earnings of $1.57 that analysts were looking for, according to a survey by Zacks Investment Research.

Revenue fell 18 per cent to $8.2 billion in the period.

Profit for 2015 is now expected to be around $1.9 billion, the company said, up slightly from the $1.8 billion it had projected.

Shares of Deere & Co. rose $3.89, or 4.35 per cent, to close at $93.35 in Friday trading. Its shares are up 3.7 per cent over the past year.