Deere beats profit expectations on strong pricing

NEW YORK, Aug 15 (Reuters): Deere & Co beat analysts' expectations for third-quarter profit on Thursday, as stronger pricing and cost control measures protected its margins from sluggish demand for its farm equipment, sending shares of the company up 4 per cent before the bell.

US machinery makers have succeeded in maintaining the price increases they implemented two years ago, a move that was prompted by supply chain complications and a surge in demand for industrial and agricultural equipment.

The higher prices have helped farm equipment makers to shield their profits from a slowdown in demand for new machines amid a decline in crop prices and high borrowing costs, which have also forced dealers to limit inventory restocking.

US farm incomes are forecast to plunge in 2024 due to a sharp decline in commodity crop prices, heightened production costs and shrinking government support.

In order to manage inventory levels and safeguard their profit margins, farm equipment manufacturers such as Deere and CNH Industrial have modified their production strategy.

Deere said in June it would cut an unspecified number of production jobs and reduce salaried employees to keep a tight lid on costs.