Saturday , October 23 2021

Deere blames commercial war for perspective worsening


Deere did not compare quarterly profit estimates for the fifth consecutive quarter and cut its projections for the full year as the escalating US-China trade war threatens Deere's farm incomes and demand for equipment.

Deere shares, known for their green tractors and harvesters, fell 4 percent to $ 140 in the premarket.

US agricultural exports are likely to suffer as the two largest economies in the world scale tariffs on each other's imports amid the talks.

Earlier this week, soybean futures contracts fell to their lowest level in more than 10 years, which is pushing US farmers whose incomes are already under pressure from a global grain surplus.

China, the world's largest soy importer, bought about $ 12 billion in US soybeans in 2017, but most of it shifted purchases to Brazil last year because of the trade fight, leaving American farmers with surplus products.

"Continued concerns about access to the export market, short-term demand for commodities such as soybeans and a delayed planting season in much of North America are making farmers more cautious about making large purchases, , said Executive Director Samuel Allen. an affirmation.

Deere, which gets almost 60 percent of its sales from the United States and Canada, said it now expects year-round sales of equipment to increase 5 percent, compared with a 7 percent increase as previously expected.

The company reduced its fiscal profit forecast for 2019 to $ 3.3 billion from its previous forecast of $ 3.6 billion.

"The lower forecast is in part a result of the actions we are taking to prudently manage field stocks, which will result in production levels falling below retail sales in the second half of the year," Allen said.

Some US business executives have warned that costs related to the latest round of China's product tariffs will be passed on to consumers in the form of higher prices.

Walmart said on Thursday that prices for US consumers will rise due to higher tariffs on China's products.

Net income attributable to Deere fell 6.1 percent to $ 1.14 billion, or $ 3.52 per share, in the second quarter ended April 28, losing analysts' estimates of $ 3.62 a share, according to Refinitiv's IBES data.

Net sales rose 5.4 percent to $ 10.27 billion and were above Wall Street's estimate of $ 10.19 billion.

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