World’s largest farm-equipment maker Deere reported a 43 percent drop in profit, while sales also declined. Deere also cut its full year profit forecast, blaming lower corn prices and weak farm income. Leah Duncan reports.
Farmers are hurting and that's bad news for Deere. The world's largest farm-equipment maker reported a 43 percent drop in its first-quarter profit, while sales declined 17 percent-- though it did top estimates. It also cut its full-year profit forecast. The problem... corn prices have been falling which leads to weak farm income and that means farmers are buying fewer of its machines. Deere said sales from farm and turf equipment- which makes up almost two thirds of its revenue, are expected to fall 23 percent globally this year--more than was previously forecasted... the stronger dollar part of the problem as well. Company CEO Samuel Allen said "Deere's first-quarter performance reflected sluggish conditions in the global farm sector, which reduced demand for agricultural machinery, particularly larger models, and led to lower sales and income." But despite the continued pullback in the agricultural sector, Deere says it expects to remain solidly profitable this year. The stock fell about one percent in early trading Though it did get a boost earlier this week after Warren Buffett's Berkshire Hathaway disclosed a five percent stake in the company.