(Bloomberg) -- Deere & Co. unexpectedly maintained its annual profit outlook as the world’s top tractor maker sought to cut costs in a slumping farm economy. Shares jumped by about five per cent in pre-market trading.
The Moline, Illinois-based company said net income for the current fiscal year would be about US$7 billion, on par with its outlook in May and above the Bloomberg estimate for $6.94 billion. That’s as the company reported third-quarter net income of $1.73 billion, above an estimate for $1.59 billion.
Analysts expected the company to cut its outlook for the third straight quarter in the wake of Deere’s recent layoff announcements. Rival AGCO Corp. trimmed $1 billion from its outlook in July. Instead, Deere kept its guidance unchanged, even with the company’s global net sales slumping 17 per cent in its fiscal third quarter.
“In response to weak market conditions, we have taken steps to reduce costs and strategically align our production with customer needs,” Deere Chief Executive Officer John May said in a statement Thursday. “Although these decisions were difficult, they are vital for our continued success and competitiveness.”
Corn and soy prices have been hovering around the lowest levels since 2020, giving farmers less to invest in new equipment or land. Still, farm sentiment has started to perk up with the Purdue University and CME Group’s agriculture sentiment index recently rising to the highest since March as growers were comparatively less pessimistic than they were a year ago.
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