NEW YORK — A slowing global economy and the effects of a prolonged U.S. drought caught up to Deere & Co. in its fiscal third quarter, as its net income rose 11 percent but cut its revenue prediction for the year.
The ongoing drought in the Midwest, a stronger dollar and costs to introduce a slew of new products hurt the world’s largest producer of agricultural equipment.
The Moline, Ill., company, said Wednesday that it earned $788 million, or $1.98 per share for the quarter ended July 31, compared with $712.3 million, or $1.69 per share for the same period last year.
Revenue rose 15 percent to $9.59 billion. Sales of tractors and other farm equipment, by far its biggest segment, rose 14 percent to $7.27 billion.
Deere also makes a wide range of construction and forestry equipment, including backhoes and excavators. That segment’s sales jumped 23 percent to $1.66 billion.
Sales from Deere’s financial services segment, where it offers crop insurance, loans and other aid, rose 3 percent to $565 million.
Since it touches many important markets, it provides a unique look into the state of the U.S. and global economies. Deere’s earnings have held up better in recent quarters than other U.S. companies that are considered economic bellwethers, such as UPS and 3M.
Besides some of its red-hot international markets cooling down and a serious lack of rain shrinking crop yields in the U.S., Deere says the introduction of a slew of new products reduced the efficiency of its production lines.
It expects those factors to continue to hurt its results in the near term. Deere sees net income of $3.1 billion for the year ending in October, down from $3.35 billion forecast three months ago.