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Deere shares fall after company cuts full-year outlook

A John Deere 210G excavator loads soil onto a dump truck as a foundation is dug for a new home in Dunlap, Illinois.
Daniel Acker | Bloomberg | Getty Images
A John Deere 210G excavator loads soil onto a dump truck as a foundation is dug for a new home in Dunlap, Illinois.

Shares of Deere fell more than 5 percent Friday despite posting better-than-expected earnings.

The company reported earnings per share of $1.56 for its second quarter, while analysts expected a profit of $1.47 a share.

That said, Deere reduced its fiscal-year net income forecast to $1.2 billion from $1.3 billion. Last year, the company had forecast net income to come in at $1.4 billion for the fiscal year.

"Although our forecast calls for lower results this year in light of ongoing market pressures, Deere is continuing to perform at a much higher level than in previous downturns," Samuel Allen, the company's chairman and CEO, said in a statement.

Deere also forecast a fiscal-year sales decline of 9 percent, less steep than the 10 percent it had previously expected.

"Deere's financial condition remains strong and we believe the company is well-positioned to capitalize on attractive growth opportunities that will deliver value to our customers and investors in the future. At the same time, we are continuing to focus on ways to streamline our operations and make them more efficient and profitable," he said.

In the agriculture and turf segment, the larger of Deere's two equipment businesses, sales were flat at $5.7 billion. Global sales in the construction and forestry segment fell 16 percent to about $1.4 billion.

Equipment sales fell 6 percent in the United States and Canada and decreased 1 percent internationally.

The John Deere Capital financial services arm's net income dropped 40 percent to $69.6 million on bigger losses on lease residual values, less-favorable financing spreads and increased provisions for credit losses.

Deere forecast industry-wide agricultural equipment sales to decline 15 percent to 20 percent in the United States and Canada and to be flat to down 5 percent in the European Union in 2016 due to low commodity prices and stagnant farm income. It expects the high horsepower category to show the steepest drop.

The company's stock has been under pressure over the past year, falling more than 12 percent.

DE 12-month chartSource: FactSet

— Reuters contributed to this report.