By James B. Kelleher
CHICAGO (Reuters) - Deere & Co said
The world's largest maker of farm equipment released its outlook on Wednesday along with a fiscal fourth-quarter profit that beat Wall Street expectations on sales of its tractors and harvesters in North America and other markets. Those sales offset poor demand in Europe.
The Moline, Illinois-based company warned that the coming year would be complicated, with a record number of new model introductions as a result of new, more stringent emissions standards in many markets. Its shares, which have risen more than 40 percent this year, were down 1 percent in premarket trading.
Deere expects higher raw-material costs in 2011 and a less favorable sales mix in its flagship farm division.
As a result, it said it expects a full-year 2011 profit of $2.1 billion. Analysts on average expected $2.42 billion, according to Thomson Reuters I/B/E/S.
The forecast "reflects the complexity of transitioning to these new equipment models as well as increased product costs to comply with the regulations," the company said in a statement.
The company reported a fiscal fourth-quarter profit of $457.2 million, or $1.07 a share, compared with a net loss of $222.8 million, or 53 cents a share, a year earlier.
Sales rose 35 percent to $7.2 billion.
Analysts on average expected the Moline, Illinois-based company to report a profit of 95 cents a share on sales of $6.25 billion, according to Thomson Reuters I/B/E/S.
The company, which also makes equipment used by builders and foresters, said those sales, which tumbled after the financial crisis, rebounded 75 percent during the quarter from record lows.
The company's agricultural equipment line contributed most to the quarterly results. Deere said sales to the U.S. farm sector included "a highly favorable sales mix of larger equipment."
The quarterly results are "impressive," said Oliver Pursche, president of Gary Goldberg Financial Services and co-portfolio manager of the GMG Defensive Beta Fund <.MPDAX>.
Despite Deere's forecast, Pursche is optimistic about its prospects based on its business in India and its rebounding construction and forestry business.
During the quarter, Deere said it was opening a new combine-harvester factory and it opened a joint-venture plant that will make construction equipment.
Deere's forecast is overly cautious, Pursche said, and its forecasts for farm commodity prices -- which are important for tractor and combine sales -- were "a bit low."
"Their position in farming and agriculture," he said, "coupled with our more bullish price outlook on agricultural commodities should further strengthen demand for their products."
Goldberg's fund doe not own any Deere shares. But he said that clients in some of the private accounts he helps manage at Gary Goldberg did own the company's stock.
(Reporting by James Kelleher. Editing by Robert MacMillan)
