Investing.com -- Deere & Company (NYSE:DE) has slashed its full-year net income guidance, in a sign that elevated interest rates are eating away at farmer demand for high-priced agricultural equipment.
A steep fall in crop prices and a jump in production expenses are also threatening to dent incomes for U.S. farmers, with the Department of Agriculture recently predicting that the net take-home for farms would slump to $116 billion in 2024. Net farm incomes in nominal dollars came in at $186 billion in 2022.
Farmers have begun to recalibrate their spending plans, particularly for high-end equipment like the tractors and grapples made by Deere.
The company subsequently lowered its projected net earnings to between $7.50 billion to $7.75 billion, down from a prior range of $7.75 billion to $8.25 billion. Bloomberg consensus estimates had called for an outlook of $7.86 billion.
Shares in Deere slipped in premarket U.S. trading on Thursday.
In a statement, Deere Chief Executive John May noted that "moving forward" the company expects "agricultural fundamentals" to normalize from record levels seen in the prior two years.
Net income in the group's fiscal first quarter decreased by 11% versus the year-ago period to $1.75 billion. However, the number beat analysts' projections thanks in part to strength at Deere's construction and forestry division, which helped offset a 7% decline in net sales at its precision agricultural unit.