Deere profit beats on strong farm equipment demand, shares jump

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Deere & Co shares looked poised for a strong start after the farm equipment giant raised its forecast for full-year earnings, noting "signs of further stabilisation" in the global market, and a "strong recovery" in South America.

Total revenue increased to $8.29 billion from $7.88 billion, beating the FactSet consensus of $8.02 billion, as financial and other revenue were better than expected while agriculture and turf and construction and forestry revenue were in line with forecasts.

Revenues rose 2.2% from previous year to $7.26 billion, in-line with analysts' view for $7.27 billion.

Equipment operations posted a $1.11 billion operating profit for the three-month period and $1.36 billion for the six months, in comparison to an operating profit of $688 for the quarter and $902 million for six months one year ago. Net sales and revenues are projected to increase about 9% for fiscal 2017 with net income attributable to Deere & Company of about $2.0 billion. For the year analysts expect EPS of $4.94 compared with $4.81 last year.

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Looking ahead, DE forecast Q3 revenues to rise 18% to about $6.92 billion, well ahead of Wall Street's $6.24 billion outlook. The company will gain from the implementation of operating plans and disciplined cost management as well as the impact of a broad product portfolio.

The company's sales have been hit in the past as bumper corn and soybeans harvests drove down prices, leaving farmers with less cash to spend on equipment.

Shares of Deere traded up 5.5% at $118.81 in the premarket Friday morning, a new 52-week high if it holds after the bell. The stock has climbed 36 percent in the last 12 months.

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