By James B. Kelleher
(Reuters) - Deere & Co
The No. 1 farm equipment maker said on Wednesday that chilly, rainy weather had delayed plantings in the United States and Canada and threatened the harvest in the United Kingdom, weighing on farmer sentiment.
The Moline, Illinois-based company, which also makes earth-moving equipment for builders, slashed its forecast for sales to the construction industry, citing concerns about the outlook for U.S. economic growth and the cooler spring weather.
Deere said it expected worldwide sales of construction equipment to fall 5 percent this fiscal year. In February, it had forecast a rise of 3 percent, boosted in part by higher international demand.
William Blair & Co analyst Lawrence DeMaria called the company's revised outlook for construction sales "somewhat of a disappointment but not a total surprise, given weak results from competitors."
Last month, Caterpillar Inc
Peoria, Illinois-based Caterpillar said it believed many construction companies had jumped the gun last spring, when unseasonably warm weather, combined with signs of the nascent U.S. economic recovery, prompted many customers to place orders for new machines.
"Farm is carrying the load, and construction is soft," said analyst Eli Lustgarten of Longbow Research in St. Louis. "Construction is where the big change is."
LOWER SALES OUTLOOK
JPMorgan analyst Ann Duignan said investors had expected Deere, the world's largest maker of tractors and harvesters, to raise its overall outlook.
Instead, the company maintained its net income forecast for the full year and reduced its expectation for full-year revenue growth to 5 percent from 6 percent.
Shares of the Deere, the world's largest maker of farm equipment, were down 5.2 percent at $88.90 in morning trading on the New York Stock Exchange.
Deere said it earned $1.08 billion, or $2.76 a share, in the second quarter ended April 30, up from $1.06 billion, or $2.61 a share, a year earlier.
Excluding a $56 million tax charge involving a German subsidiary, the profit would have been $2.90 a share, Lustgarten said.
Analysts on average expected earnings of $2.72 a share, according to Thomson Reuters I/B/E/S.
Sales rose 9 percent to $10.91 billion, exceeding Wall Street estimates of $9.85 billion.
In a statement, Chief Executive Officer Samuel Allen said the results reflected a strong global farm economy.
But Allen added: "Deere's near-term forecast is being tempered by lingering economic concerns in many parts of the world, which are restraining business confidence and growth."
Allen also said cool, wet weather in North America had delayed crop planting, slowed construction activity and hurt Deere's sales of turf-care equipment.
(Reporting by James B. Kelleher; Editing by Lisa Von Ahn)