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(Reuters) -Deere & Co on Friday raised its forecast for fiscal year 2023 after posting an increase in quarterly profit on robust demand for its high-horsepower tractors and an uptick in spending from construction customers.
Shares of the world’s largest farm equipment maker were up 3.7% before the bell.
The industrial bellwether, a barometer for the global economy, has maintained strong profit margins despite recession concerns. Demand from farmers has been strong, after elevated crop commodities last year left producers with income to purchase new equipment or upgrade their fleets.
Deere (NYSE:DE)’s margins have remained high as it has been able to raise prices across its equipment divisions, offsetting rising shipping costs and tight supply chains.
The company expects net income of $8.75 billion to $9.25 billion for the year, higher than $8 billion to $8.5 billion estimated previously.
Net income attributable to the company rose to $1.96 billion, or $6.55 per share, for the first quarter ended Jan. 30 from $903 million, or $2.92 per share, a year earlier.
Total net sales and revenue rose to $12.65 billion from $9.57 billion for first fiscal quarter ending in January.
Executives said last quarter that Deere’s North American order books were full for the year for its high-horsepower tractors and that the machinery-maker had sold out of combines ahead of planting season.
Even though U.S. farm incomes are expected to fall for the first time since 2019 due to higher production costs and a drop in direct government payments, analysts said strong farm economics still lean in the company’s favor.
