(Reuters) – Deere revised its annual profit forecast downwards for the second time on Thursday, citing decreased purchases of tractors and combine harvesters by farmers in response to declining crop prices.
The largest farm equipment manufacturer in the world now anticipates a net income of approximately $7 billion for fiscal 2024, down from its previous estimate of $7.50 billion to $7.75 billion.
The U.S. Department of Agriculture projects a 25.5% decrease in net farm income to $116.1 billion for this year compared to 2023, attributing this decline to the sharp drop in corn and soy prices.
In addition to the falling crop prices, higher interest rates have further impacted farmers, leading to excess inventory for equipment dealers and prompting companies like Deere and CNH Industrial to scale back production.
Data from Sandhills Global, which monitors used equipment inventory for machinery manufacturers, shows a significant 95% year-on-year increase in U.S. inventories of tractors with 300 horsepower and above in March.
Deere now predicts a 20% to 25% decline in sales of large agriculture equipment for the year, compared to its earlier forecast of around a 20% drop.
Shares of the company were down nearly 4% in premarket trading.
(Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)
