For the July quarter, Deere produced earnings per share of $1.55, well above the Street consensus of 94 cents and up 1 percent from $1.53 a share a year ago. Analysts surveyed by Thomson Reuters had been looking for earnings to fall 38 percent.
Overall, Deere's revenue in the quarter was down 11 percent to $6.72 billion.
"The quarterly results obviously handily exceeded expectations and were driven by ag and turf margins," William Blair equity analyst Lawrence De Maria said in a note. "We do not see the exceptional performance in ag and turf as a game-changer. We assume material costs played a big role in the margins."
During the July quarter, Deere's agriculture and turf segment produced revenue of $4.7 billion, down 11 percent from the year-ago period but above analysts' estimates. However, the company's construction and forestry segment generated revenue of $1.16 billion, a decline of 24 percent from the year ago and below Street estimates.
The earnings call also produced more optimism about the Brazil's ag market, with Deere CFO Rajesh Kalathur saying "there's some fairly favorable signs," including short-term order book activity on farm equipment. That said, the company was more guarded on whether "that demand surge" will continue into calendar 2017.
South America has been one of Deere's key overseas markets in recent years but economic and political turmoil in Brazil and a poor corn crop there have proved to be challenging.
Deere's primary market continues to be North America, where the company commented that spring equipment sales are "down in the single-digit range."
For its outlook, Deere said fiscal 2016 net income is anticipated to be about $1.35 billion, above its prior guidance of about $1.2 billion.
Deere said worldwide sales of ag and turf equipment are forecast to fall by about 8 percent for fiscal-year 2016, which it said includes a negative currency-translation effect of about 2 percent. Additionally, it sees industry sales for ag equipment in the U.S. and Canada down 15 to 20 percent for 2016, reflecting the impact of low commodity prices and weak farm incomes.
The company's financial services business produced lower results for the quarter, which Deere said was mostly "due to less-favorable financing spreads, a higher provision for credit losses and higher losses on lease residual values."
Meanwhile, Deere said worldwide sales of construction and forestry equipment are forecast to be down about 18 percent for 2016, including a negative currency-translation effect of about 1 percent. It said the decline reflects the impact of weak conditions in North America.