Spurred by rising oil prices, growth in construction and robust housing demand, Deere & Company on Friday reported a significant uptick in sales.
Revenue at the Moline, Ill.-based company that owns the John Deere tractor brand climbed 29 percent to $10.72 billion for the three months through April 29. Net income rose to $1.2 billion, or $3.67 a share.
“Farm machinery sales in both North and South America are making solid gains and construction equipment sales are continuing to move sharply higher,” chief executive officer Samuel Allen said in a statement. “At the same time, we are experiencing higher raw-material and freight costs, which are being addressed through a continued focus on structural cost reduction and future pricing actions.”
Higher steel prices are a key short-term obstacle, the company said, after President Trump’s decision to impose a 25 percent tariff on imports for the metal. Several U.S. trading partners have been granted a reprieve from the duty until June 1.
Looking ahead, executives project strong demand for both new and used equipment amid expected growth of 2.9 percent in construction investment this year and higher global oil prices — stemming in part from the U.S. withdrawal from the Iran nuclear deal.
“Our large-tractor retail order books are out into the October time frame, so we feel really good,” Allen said.
Despite concerns over the Trump administration’s actions on trade, the company said, overall farmer sentiment is upbeat.
The White House earlier this year announced $50 billion in tariffs on Chinese imports, prompting the world’s second-largest economy to retaliate with a 25 percent tariff on soybeans and a reported block on any imports of the products.
Trump has vowed to protect U.S. farmers while acknowledging that his policies may cause some short-term pain.
Deere & Company’s stock rose 5.1 percent to $154.32 in New York trading on Friday.
