Market News & Headlines >> Deere Cutting Production, Stock Soars
In a further sign of the slumping farm economy, Deere & Co., the world’s largest farm equipment maker said on Friday that it was cutting production further and would lay off workers at plants in Illinois and Iowa.
However, company’s stock soared 13.5% in Friday trade after it reported better-than-expected quarterly results and raised its fiscal year profit outlook by 12.5%. Shares of Deere closed Friday at $87.32, up from $76.94 a day earlier. The company’s stock was up roughly another 1% at midday on Monday after several investment firms raised their price forecasts.
Deere officials said they were relying on cost cutting, rather than a rebound in demand, to deliver fiscal-year earnings of $1.35 billion, up from their previous forecast of $1.2 billion. Officials added they were expanding cost-cutting efforts to offset slower-than-expected sales. Deere said it anticipated equipment sales would decline 10% for the fiscal year, steeper than the 9% drop it had forecast in May.
Deere has put about 2,000 employees in its Midwestern factories on indefinite layoff since 2014, spokesman Ken Golden said. Deere's global workforce is now about 57,000 employees, down from about 67,000 in 2013. The company said production hours at its East Moline, Illinois, combine factory will decline 60% during the current quarter. The company also plans to reduce output at its Waterloo, Iowa tractor plant by 20%.