PITTSBURGH -- Deere & Co., the world's largest maker of farm equipment, said Wednesday its fiscal second-quarter profit slid 38 percent as lower crop prices and the global recession dampened demand for its products. It also slashed its 2009 profit outlook by 27 percent.
Its shares fell $1.22, or 2.8 percent, to $42.60 in premarket trading.
Farmers have become increasingly cautious about spending on new equipment as crop prices -- the main factor driving machinery sales -- have tumbled from historic highs last year. The costs of fertilizer and fuel, meanwhile, remain relatively high. And the global credit crunch has made it more difficult to get loans.
The Moline, Ill.-based company said it earned $472.3 million, or $1.11 per share, during the three months ended April 30, down from $763.5 million, or $1.74 per share, a year ago.
Revenue fell 17 percent to $6.75 billion from $8.10 billion in the year-earlier quarter.
Analysts surveyed by Thomson Reuters, on average, had expected profit of $1.07 per share on revenue of $6.60 billion. Those estimates typically exclude one-time items.
Sales of Deere's tractors, combines and other agricultural equipment -- its biggest source of revenue -- fell 4 percent due to currency exchange fluctuations and lower shipments. Its commercial and consumer division, which makes products like riding mowers, reported a 24 percent decline. Sales of Deere's construction and forestry equipment plummeted 55 percent.
To cope with the weaker demand, Deere has laid off more than 1,000 workers this year, though it recalled 68 workers recently.
It also combined its agriculture equipment division with its commercial and consumer business to cut costs and streamline operations. The restructuring, along with news of layoffs and the worker recall, apparently buoyed investors' hopes, driving Deere stock up 63 percent between early March and the end of April.
Deere's finance arm reported a 56 percent decline in quarterly profit.
The company lowered its projected 2009 net income to $1.1 billion, down from $1.5 billion that it forecast earlier. It cited uncertain market conditions.