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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (652)	8/19/1998 9:38:00 AM
From: porcupine --''''>	Respond to of 1722

Deere sees gains despite expected farm economy slowdown MOLINE, Ill., Aug 18 (Reuters) - Deere & Co. (DE - news) , the largest agricultural equipment manufacturer in the world, on Tuesday reported higher fiscal 1998 third-quarter profits and said it is well positioned to continue to generate good results despite an expected slowdown in the farm economy. Deere said earnings for its fiscal third quarter ended July 31, 1998 rose to $290.8 milion or $1.20 a share ($1.19 on a diluted basis), up from $252.7 million or $1.00 a share ($0.99 on a diluted basis) in the same period a year ago. Sales and revenues increased 8 percent to $3.69 billion from $3.43 billion in the third quarter last year. Analysts had expected Deere to report fiscal third quarter earnings of $1.18 a share, according to First Call, which tracks these estimates. With regard to the company's agricultural equipment operations, worldwide farm-commodity prices continued to fall during the quarter as a result of prospects for increased global supplies of grains and oilseeds, as well as fears about the Asian economic crisis, Deere said. U.S. crop conditions remained generally good throughout the Midwest, with federal financial assistance expected to offset some of the drought-related losses being experienced in the South, it said. Under these conditions, Deere said it expects retail demand for agricultural equipment will decline for the rest of 1998 and 1999. As a result, Deere said its production schedules have been reduced in the fourth quarter of 1998 and are expected to be reduced in 1999. In the construction-equipment sector, low interest rates and generally favorable economic conditions have continued to strengthen demand. Housing starts are expected to average above 1.5 million units in 1998, their highest level in more than a decade. In addition, a new highway bill, the Transportation Equity Act for the 21st Century, will provide a significant increase in highway funding over the next six years. Although the retail environment is expected to remain healthy, Deere said that fourth-quarter production volumes of its construction equipment will decline with the introduction of a new product-distribution system. The system is designed to more closely align production with retail demand and thus reduce inventory levels. Next quarter's construction equipment production schedules have been set lower as a result, it said. ''We're confident that our continuing investment in new products and facilities, and geographic expansions, will help us deliver solid returns through all phases of the business cycle,'' said Hans Becherer, chairman and chief executive officer. ''At the same time, initiatives geared to process and quality improvement are moving ahead and are expected to yield substantial efficiency gains in the future,'' he said in a statement. Copyright c 1998 Reuters Limited.