Deere & Company (DE) beat market estimates on revenue numbers for the third quarter of 2018 but missed out on adjusted EPS. Shares of Deere were down about 4% in the pre-market trading session.
The company reported worldwide net sales and revenues of $10.3 billion, up 32% from the same period last year. Equipment net sales rose 36% to $9.3 billion, helped by strength in key markets. Net income grew to $910.3 million or $2.78 per share compared to $641.8 million or $1.97 per share in the prior-year period. Adjusted net income was $849 million or $2.59 per share.
Costs and expenses rose to $9.1 billion versus $6.9 billion in the prior-year quarter. “Farm machinery sales in North America and Europe made solid gains, while construction equipment sales moved sharply higher and received significant support from our Wirtgen road-building unit. At the same time, we have continued to face cost pressures for raw materials and freight, which are being addressed through a combination of cost management and pricing actions,” said CEO Samuel Allen.
Performance in the third quarter benefited from favorable conditions for agricultural and construction equipment as well as the Wirtgen Group acquisition. The Wirtgen Group acquisition added 17% to net sales for the quarter.
Farm machinery sales saw good gains in North America and Europe while construction equipment sales posted significant increases. Equipment net sales in the US and Canada rose 29% for the quarter while outside the US and Canada, sales rose 45%.
Deere & Company expects equipment sales to increase by about 21% for the fourth quarter of 2018 and by about 30% for the full year of 2018 compared to the respective same periods in 2017. Net sales and revenues for full-year 2018 are expected to grow around 26%. GAAP net income is expected to come in at $2.3 billion while adjusted net income is expected to be $3.1 billion.
Worldwide sales of agriculture and turf equipment are expected to increase by about 15% for fiscal-year 2018 while for construction and forestry equipment, sales are expected to grow about 81%. In 2018, net income for financial services is estimated to total approx. $815 million.
Related: Deere Q2 2018 Earnings Infographic