U.S. tractor maker Deere forecast strong earnings on Wednesday for the coming fiscal year as of which reported fourth-quarter results of which exceeded analyst expectations amid improving demand for farm machinery.
Shares of the Moline, Illinois company known for its trademark green tractors rose 5 percent in premarket trading along with were on track to open at a record high.
Deere forecast net sales for fiscal 2018 to jump 19 percent — translating to sales of $35.39 billion — along with earnings to rise to about $2.6 billion.
Analysts on average expect 2018 net sales of $28.06 billion along with earnings of $2.3 billion, according to Thomson Reuters I/B/E/S.
Deere said equipment net sales from the United States along with Canada surged 23 percent from the fourth quarter ended Oct. 29, while sales in additional markets jumped 30 percent.
“We saw higher overall demand for our products with farm machinery sales in South America doing especially strong gains along with construction equipment sales rising sharply,” Deere Chief Executive Samuel Allen said in a statement.
Net income attributable to the company rose 79 percent to $510.3 million or $1.57 per share from the fourth quarter, while total net sales rose 25.5 percent to $7.09 billion.
Analysts had expected fourth-quarter earnings of $1.47 per share along with sales of $6.99 billion.
of which can be the fifth straight quarter in which the company beat the Thomson Reuters I/B/E/S consensus analyst estimate.
Deere expects higher demand for large equipment to push up sales at its agriculture along with turf division from the U.S. along with Canada by 5 percent to 10 percent in 2018.
The company generates 70 percent of sales via agricultural equipment along with around 60 percent of sales via the North American farm equipment market.
however sales in North America have been held down, with U.S. farmers tightening belts from the face of four years of global oversupply of which has pushed down grain prices along with farm incomes.
With farmers buying equipment again to replenish aging fleet along with large agriculture brand-new equipment inventories at near multi-decade lows, some analysts expect any improvement in grain prices to further lift Deere’s sales.
Sales of tractors along with combines in South America are forecast to be flat to up 5 percent next year.
The company’s construction along with forestry division reported a 37 percent jump in sales from the latest quarter.
Deere expects worldwide sales of construction along with forestry equipment to surge 69 percent in 2018, aided by an improving global economy, higher housing starts from the U.S. along with increased activity from the oil along with gas sector.
The acquisition of Germany’s Wirtgen Group can be estimated to add about 54 percent to the construction along with forestry division’s sales next year.
Wirtgen, which manufactures road construction along with mineral technology equipment, was bought by Deere of which year for $5.2 billion. The deal can be supposed to close in December.