© Reuters. FILE PHOTO: Equipment for sale at a John Deere dealership in Denver, Colorado, U.S. May 14, 2015. REUTERS / Rick Wilking / File Photo
By Bianca Flowers and Aishwarya Nair
(Reuters) -Deere & Co on Friday missed Wall Street’s revenue targets and said it was struggling to secure parts for its heavy machinery, sending shares down 11%. .
Deere (NYSE:) delivered a strong profit forecast for the full year but was overshadowed by comments that many of the machines it plans to sell are on hold due to supply chain issues.
The company had only missed sales expectations once in the previous 10 quarters. The farm equipment maker is expected to post net sales of $13.2 billion, but sales of $12.02 billion.
Even though the machinery giant weathered the storm of supply chain bottlenecks, revenue was nearly 9% below analyst consensus suggesting that raw material shortages, plus inflationary pressures, were not enough. development, is beginning to take its toll.
“I think Street thought this could happen because expectations have been elevated, quite frankly,” said Stephen Volkmann, senior machinery analyst at Jefferies. “Their guidance for the whole year tells you that they think things will improve.”
Shares fell 11.5% to trade at $322.41.
Company executives told analysts on a conference call that the supply chain will survive this year.
“Given solid fundamentals in agriculture, coupled with potential supply constraints, we do not see the industry being able to meet all of the demand that exists,” said Ryan Campbell, Chief Financial Officer. in 2022”.
Deere’s net income was $2.09 billion or $6.81 per share for the quarter ended May 1, slightly beating the Refinitiv-IBES consensus estimate of 6.71 dollars per share.
Before earnings, manufacturers’ stock performance largely outperformed the overall market, unlike other industries where supply constraints were a definite pain point for growth. revenue growth.
Higher input costs have affected farmers’ profits, but farmers’ net income is still relatively high, which is a bright spot for equipment sales. Sentiment towards tractors and small sales are positive, and company executives believe the aging machinery will encourage farmers to upgrade their fleets.
“They’ve navigated the post-pandemic and post-pandemic supply chains pretty well so far,” said Jerry Revich, analyst at Goldman Sachs (NYSE:). “The fact that they have over a billion dollars of inventory in-house gives them some visibility into ramping up production, so we’ll see if they can do it.”
