Deere Earnings Rise in 3rd Quarter, Helped by Cost Cutting

Lawn-care equipment maker Deere & Co. says its fiscal third-quarter profit rose 13 percent, helped by cost-cutting efforts and strong sales of consumer and construction equipment.

Net income for the quarter that ended July 31 totaled $436 million, or $1.85 per share, compared with a profit of $387 million, or $1.58 per share, in the same three months last year.

Third-quarter revenue increased 8 percent to $6.27 billion, up from $5.82 billion a year ago.

Analysts had predicted a profit of $1.81 per share on revenue of $5.77 billion, according to a Thomson Financial poll. Deere shares rose 22 cents to $68.88 in Tuesday's midday trading on the New York Stock Exchange.

Deere says ongoing efforts to hold down costs by reducing inventories helped boost earnings.

"We are seeing continued benefit from our successful efforts to restrain costs and operate with lower assets," Chairman and Chief Executive Robert W. Lane said in a statement.

Equipment sales in the United States and Canada grew 6 percent, while sales outside the two countries -- excluding the effect of currency translation -- grew 3 percent.

Sales of construction equipment rose 13 percent for the quarter, while commercial and consumer equipment sales were up 8 percent, paced by demand for landscape products. Sales of Deere's trademark green-and-yellow farm equipment increased 1 percent, largely due to higher prices and currency translation.

Deere, based in Moline, Ill., forecast a profit of $200 million for the fourth quarter and $1.63 billion for the full fiscal year. The company predicted equipment sales will show an increase of 1 percent in the fourth quarter and between 2 percent and 3 percent for the year.

The company said inventory reductions will continue, trimming production by about 10 percent in the fourth quarter and 5 percent for the year.

For the year, farm machinery sales are expected to dip about 4 percent as higher interest rates and energy costs weigh on farm incomes and spending. Construction equipment sales are expected to rise about 12 percent as improved nonresidential construction offsets a slight decline in home building. Sales of commercial and consumer equipment are expected to increase 8 percent for the year, buoyed by demand for landscape products and a new line of riding lawn equipment.

Along with John Deere tractors and other farm machinery, the company makes construction equipment and consumer products that include mowers, chain saws and snow blowers.