NEW YORK – The effects of a slowing global economy caught up to Deere & Co. in its fiscal third quarter, as its net income rose 11 percent but fell well short of Wall Street’s expectations.
Deere also cut its revenue prediction for the year, and investors reacted strongly. Shares dropped more than 6 percent for their biggest daily decline in a year.
Delays in production lines also hurt the world’s largest producer of agricultural equipment. Ongoing drought in the Midwest had a minimal impact, executives said in a conference call with analysts.
The Moline, Ill., company said Wednesday that it earned $788 million, or $1.98 per share for the quarter ended July 31, compared with $712.3 million, or $1.69 per share for the same period last year. Analysts expected $2.31 per share in the most recent quarter, according to FactSet.
Revenue rose 15 percent to $9.59 billion, missing analysts’ average prediction of $9.61 billion.
Sales of tractors and other farm equipment, by far its biggest segment, rose 14 percent to $7.27 billion. Deere also makes a wide range of construction and forestry equipment, including backhoes and excavators. That segment’s sales jumped 23 percent to $1.66 billion.
While those two segments improved markedly from a year ago, growth has slowed. In last year’s third quarter, sales of agricultural and turf equipment rose 22 percent and construction and forestry equipment revenue leaped 34 percent.
Sales from Deere’s financial services segment, where it offers crop insurance, loans and other aid, rose 3 percent to $565 million.
Deere shares fell $5.03, or 6.3 percent, to close at $75.10 Wednesday. The stock is now down for the year.