by Tomi Kilgore, Dow Jones
Deere’s stock drops, as an earnings beat isn’t enough to assuage concerns about too much used equipment in the marketplace and a cautious consumer
Deere’s stock was dropping Thursday as concerns over customer caution and the supply of used equipment in the marketplace continue.
Shares of Deere & Co. were having their worst day in more than three years on Thursday after the maker of agricultural and construction equipment beat earnings expectations but revenue continued to fall, and as oversupply in the marketplace remained an issue.
With customers cautious due to the uncertainties surrounding trade policies and the health of the economy, Chief Executive John May said the company (DE) also continues to address “high levels of used equipment in the industry.”
“Demand continues to be pressured by high interest rates, elevated used inventory levels in late model year machines and trade uncertainty, which is partially mitigated by tight global stocks for grains and oilseeds,” said a company executive, according to a FactSet transcript of the post-earnings call with analysts.
That’s having a particular impact on large turf equipment, as industry sales in the U.S. and Canada are expected to be down about 30% in the current fiscal year from a year ago.
And fiscal 2025 sales for Deere’s largest business segment – production and precision agriculture, which includes large tractors, cotton pickers, sugarcane harvesters and soil-preparation equipment – are expected to decline 15% to 20%.
Also for the fiscal year, small agricultural and turf sales are expected to be down about 10% and construction and forestry sales are projected to decline 10% to 15%.
The stock dropped 8.1% in morning trading toward its lowest close since April 30. It was also headed for its biggest one-day drop since it tumbled 14.1% on May 20, 2022.
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