Deere profit falls less than expected

Deere, the world's largest farm equipment manufacturer, reported a much smaller-than-expected drop in quarterly profit on Friday.

The Moline, Ill.-based company also raised its fiscal-year outlook as cost controls helped it weather a global agricultural recession and difficult construction market.

The U.S. farm economy is in its third down year, with the U.S. Department of Agriculture forecasting a 3 percent drop in nationwide income to $54.8 billion in 2016. Costs of seeds and chemicals remain high, while record-large harvests are pressuring crop prices.

During a time of sluggish machinery sales, Deere has slowed production and reduced labor. About 2,000 employees in its Midwestern factories have been on indefinite layoff since 2014, spokesman Ken Golden said.

Deere's global workforce is now about 57,000 employees, down from about 67,000 in 2013.

'Deere is executing our business plan and keeping a tight rein on costs and assets,” Golden said.

Net income fell 4.5 percent to $488.8 million in the third quarter that ended on July 31, but earnings per share of $1.55 handily beat the analysts' average estimate of 94 cents.

Revenue declined 11 percent to $6.7 billion while Deere had previously forecast a 12 percent drop.

In the agriculture and turf segment, sales fell 11 percent, but operating profit rose 21 percent to $571 million on improved pricing, lower production costs and a decrease in selling, administration and general expenses.

The company said the much smaller construction and forestry segment's sales dropped 24 percent, while operating profit sank 58 percent to $54 million due to reduced shipments and an unfavorable product mix.

Deere increased its fiscal-year earnings outlook to $1.35 billion from $1.2 billion. It forecast sales declines of 10 percent for the fourth quarter and 8 percent for the fiscal year.