(Reuters) — Farm equipment maker Deere & Co. has posted a 43 percent decline in first quarter profit and cut its full-year profit forecast as lower grain prices and weak farm income weighed on demand for agricultural machinery.
The company, which receives nearly two-thirds of its revenue from farm and turf machinery, cut its 2015 net profit forecast to $1.8 billion from $1.9 billion.
Sales of Deere’s farm and turf machinery are expected to fall 23 percent globally this year, it said, which includes a four percent negative impact of a strong U.S. dollar. The company earlier forecast a 20 percent sales reduction.
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Deere’s overall equipment sales are expected to fall 19 percent in the current quarter ending April 30.
Its sales have been hit by large crops and lower grain prices, leaving farmers with less cash to spend on equipment. Corn prices fell 15 percent last year on top of a decline of nearly 40 percent in 2013.
The U.S. Department of Agriculture recently said net farm income is expected to fall 32 percent to $73.6 billion this year, which is the lowest since 2009 and a drop of nearly 43 percent from the record high of $129 billion in 2013.
Net income attributable to Deere fell to $387 million in the first quarter ended Jan. 31 from $681 million a year earlier. Sales fell 16.6 percent to $6.38 billion.
The company’s stock had risen eight percent in the past 12 months up to the close of markets Feb. 19, which was a day before the quarterly financial report was released.
