Deere Company nyse De Shares Plummet on Lower than expected 2024 Profit Forecast

Deere & Company (NYSE: DE) Shares Plummet on Lower-Than-Expected 2024 Profit Forecast

Deere & Company (NYSE: DE) shares fell in early afternoon trading Wednesday after the world’s largest tractor maker announced a smaller-than-expected profit forecast for the upcoming year. This unsettling development is attributed to a slowdown in equipment demand from farmers, posing challenges for the world’s largest tractor maker.

Deere & Company (NYSE: DE) forecast net income for the fiscal year to range between $7.75 billion and $8.25 billion, well below Bloomberg estimates of $9.32 billion. The outlook was issued after Deere reported fourth-quarter earnings that beat expectations.

Earnings per share (EPS) came in at $8.26 for the fiscal 2023 fourth quarter, but its revenue was down 0.8% from a year ago at $15.41 billion.

Sales in its Production and Precision Agriculture unit plummeted by 6%, and its Small Agriculture and turf division experienced a 13% decrease. Deere highlighted a volume decline in both segments, partially offset by higher prices.

The farm industry is grappling with rising costs and the impact of falling commodity prices, with the U.S. Department of Agriculture estimating a 23% decrease in farm income for 2023 compared to the previous year. This trend has hit machinery makers hard, as farmers are becoming less inclined to invest in new equipment for planting and harvesting.

Rival farm machinery maker CNH Industrial NV (NYSE: CNHI) recently announced workforce reductions amid slumping equipment sales, and seed maker Corteva Inc. (NYSE: CTVA) warned of a slowdown in demand, particularly in Brazil.

Deere & Company expressed caution about the future, stating that net sales in its largest segment of production and precision agriculture could drop by 15% to 20% next year.

Market analysts, including Bloomberg Intelligence Christopher Ciolino, expressed disappointment in Deere’s 2024 guidance, pointing to a potentially weaker agricultural equipment market than previously anticipated.

Deere CEO John May remains resolute, stating,

“While our end markets will fluctuate, we remain focused on disciplined execution and strategically investing in solutions that drive customer value.”

The news has triggered a nearly 3% drop in Deere & Company shares during early afternoon trading on Wednesday, bringing the stock down to $372.45—a 15% decline year-to-date.