MINNEAPOLIS (AP) — Tractor maker Deere & Co. is taking a cautious view of 2013, as drought and economic uncertainty hold back spending in some of the world's biggest farm economies.
Also, its most recent quarterly profit missed analysts' expectations. Deere shares fell $3.16, or 3.7 percent, to close at $82.83 Wednesday.
Deere is the world's largest maker of agricultural equipment, like the bright green tractors and combines that prowl farm fields during planting and harvest seasons. Its fortunes rise and fall with those of farmers.
In recent years, that's been a booming business as strong crop prices have put money in farmers' pockets. But there were signs of a slowdown in farm spending in Deere's outlook for the fiscal year that began this month.
And with the so-called "fiscal cliff" of potential tax increases and spending cuts looming in the U.S., Deere is cautious about big spending projects.
Deere expects agriculture sales in the U.S. and Canada to be flat for the year, as farmers continue to recover from a major drought in 2012. It predicted farmers will have $402.5 billion in cash receipts for 2013 — down by $2.5 billion from Deere's August prediction — but still higher than in 2012 or 2011.
It also predicted that European sales would be flat to down 5 percent, and little changed in Asia. It expects 10 percent growth in South America. Overall Deere predicted that worldwide equipment sales will rise 5 percent for the year.
Labor expenses are rising, too. Deere hired 5,000 more people this year to support its growth. And it will have spent $480 million shoring up its pension plans in fiscal 2012 — $5 million more than it had expected — and will spend some $550 million in the current fiscal year.