(Reuters) – Deere trimmed its annual profit forecast for the second time on Thursday, as farmers buy fewer tractors and combine harvesters due to falling crop prices.
The world’s largest farm equipment maker said it now expects fiscal 2024 net income of about $7 billion, compared with its prior forecast of $7.50 billion to $7.75 billion.
The U.S. Department of Agriculture has forecast net farm income to slide 25.5% to $116.1 billion this year from 2023, as corn and soy prices plummeted to more than three-year lows.
Higher interest rates have added to the squeeze for farmers, leaving equipment dealers with bloated inventories and forcing companies like Deere and CNH Industrial to cut production.
U.S. inventories of tractors of 300 horsepower and above jumped more than 95% year-on-year in March, according to data from Sandhills Global, which tracks used equipment inventory for machinery makers.
Deere now expects sales of large agriculture equipment to decline between 20% and 25% this year, compared with its previous expectations for a roughly 20% fall.
Shares of the company were down nearly 4% in premarket trading.
(Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)
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