Deere & Co. forecast better-than-expected profit for fiscal 2015 as demand for its construction equipment mitigated the impact of declining sales of its signature green agricultural machinery.
Net earnings will be $1.9 billion in the year through October, Moline, Illinois-based Deere said Friday in a statement, up from a February projection of about $1.8 billion.
Net income was $2.03 a share for the three months through April 30, more than the $1.56 average of 20 analysts’ estimates compiled by Bloomberg.
Deere’s “construction equipment is largely domestic and should fare well as U.S. markets recover,” Karen Ubelhart, a Bloomberg Intelligence analyst, said in a May 20 report.
That’s a welcome boost for Deere, which is having a tough time with its agricultural-equipment business, the world’s largest and the source of most of the company’s revenue. Spending by farmers is declining on lower crop prices.
Construction makes up 15 percent of Deere’s equipment sales and the U.S. accounts for about 63 percent of its overall revenue. American construction spending in March was up 2 percent from a year ago, according to government data, as house-building and weather conditions improve.
Caterpillar Inc. reported Wednesday a 3 percent gain in North American retail sales of construction machines in the three months through April, bucking a global decline.