Deere & Co reported better-than-expected second quarter results on Friday.
The world’s largest maker of farm equipment posted an 18 percent drop in revenue in the quarter ended on April 30, down to $8.17 billion from $9.95 billion, beating analysts’ expectations of $7.53 billion.
Earnings dropped 30 percent to $690.5 million, or $2.03 per share, compared to $980.7 million, or $2.65 per share, the previous year.
According to Thomson Reuters I/B/E/S, analysts expected earnings of $1.55 per share.
Equipment net sales in the United States and Canada dropped 14 percent for the quarter and year to date.
Shares of the company rose 4.35% to 93.35 in extended-trading hours on Friday.
Outlook for rest of the year
The company raised its full-year earnings forecast to $1.9 billion from $1.8 billion in February.
Its agriculture equipment business is expected to see further declines as the drop in crop prices mean that farmers have less to spend on equipment.
The company said it that it expects weak demand for tractors and other heavy machinery, predicting total equipment sales to drop about 19% this year.
Upbeat housing market outlook
Deere also makes heavy construction equipment such as bulldozers and excavators.
The company has an upbeat outlook for the US housing market.
In its second quarter earning statement Deere said:
“The sales improvement reflects economic growth and higher housing starts in the U.S. offset in part by weakening conditions in the energy sector and energy-producing regions as well as lower sales outside the U.S. and Canada.”
Edward Jones equity analyst Matt Arnold wrote in a note for clients:
“We are pleased to see Deere management proactively attacking costs… amid the agriculture downturn,”
“We remain constructive on the long-term outlook for Deere, and we continue to believe the current share price reflects an overly conservative scenario.”