Deere & Co. posted a stronger-than-expected quarterly profit on Wednesday but kept its full-year forecast unchanged, indicating the challenges the farm equipment industry faces as commodity prices come off the record highs of recent years.
The Moline, Ill.-based company said cost controls had helped offset the effects of moderating demand for its tractors, harvesters and other agricultural machinery in the most recent quarter.
Deere, the world's largest maker of farm equipment, said it had earned $681.1 million, or $1.81 a share, in the first quarter ended Jan. 31, up from $649.7 million, or $1.65 a share, a year earlier.
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Analysts on average expected a profit of $1.52 a share, according to Thomson Reuters I/B/E/S.
Revenue, including from financial services, rose 3 percent to $7.65 billion.
Deere said it still expected equipment sales to fall 3 percent in fiscal 2014 and that it would post a full-year profit of about $3.3 billion, down from $3.54 billion last year.
Farmers are expected to throttle back on purchases of new vehicles this year following a bumper crop that sent commodity prices lower.
Analysts now expect crop receipts, which tend to correlate with farm equipment purchases, to fall as much as 10 percent this year.
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William Blair & Co analyst Lawrence De Maria said Deere's unwillingness to raise its forecast despite the stronger-than-expected results reflected deteriorating farm fundamentals, especially in North America.
Deere's results for the second half results and 2015 could be at risk, he added.
In morning trading on the New York Stock Exchange, Deere shares, which have outperformed the Standard & Poor's 500 stock index in recent months, were down 0.5 percent at $87.04.