FT reported that John Deere, the biggest tractor maker by sales and revenues, predicted that crop prices will continue to increase through next year, driving farm incomes to record levels.
Deere said that it expected US farm receipts to hit a record USD 359 billion in 2011, well above the previous high of USD 330.5 billion in 2008.
Mr Susan Karlix of Deere’s investor relations department said that "Historically, farm cash receipts for both this year and the previous one are a key driver for agricultural equipment sales."
Deere said that net equipment sales would rise by 18% to 20% in 2011 to USD 27.8 billion to USD 28.3 billion, up from its previous forecast of a 10% to 12% increase in net sales.
The manufacturer said demand across Europe was much stronger than it had expected, with US demand also growing faster than anticipated.
The company forecast that net income would be about USD 2.5 billion for its current fiscal year, until the end of October 2011, ahead of the USD 2.36 billion Wall Street had been expecting.
Deere issued the outlook as it reported earnings for its fiscal first quarter ahead of analysts' forecasts. The group said net income for the three months to the end of January 2011 more than doubled to a first quarter record of USD 514 million or USD 1.20 per share from USD 243.2 million or 57 cents per share in the same period a year earlier. Wall Street had been expecting about 99 cents per share. Net sales of equipment during the quarter were USD 5.5 billion, up from USD 4.2 billion a year earlier.
Mr Samuel Allen CEO of John Deere said that "Our record first-quarter performance is especially gratifying in light of market conditions that remain below normal levels in certain key sectors."