MOLINE, Ill. (AP) — Deere & Co., a manufacturer that faces threats from both ends of a trade war, cited rising costs and anxious farmers as it reported a profit shortfall for the first quarter Friday.
Shares bounced back from sharp premarket declines, however, on a relatively strong outlook, and hopes that tensions with China will recede.
The U.S. and China will continue to try to hash out trade differences next week in Washington after two days of talks wrapped up Friday in Beijing. But ongoing trade tensions have damaged U.S. farmers to a degree that they are pulling back on investing in heavy equipment.
President Donald Trump last year started slapping import taxes on Chinese goods and on foreign steel and aluminum. China, which buys almost 60 percent of all soybeans the U.S. exports, retaliated by imposing tariffs on soybeans and other farm products.
Farms already hurting because of slumping commodity prices have begun failing at an advanced rate.
The number of farm bankruptcies in Minnesota, Montana, North Dakota, South Dakota, and portions of Wisconsin and Michigan reached 84 in the 12 months leading up to June 2018, according to the Federal Reserve Bank of Minneapolis which monitors the region.
That is more than double the total from four years earlier, when rising farm bankruptcies were first noted, according to the Fed.
“Our results were hurt by higher costs for raw materials and logistics as well by customer concerns over tariffs and trade policies,” said Deere Chairman and CEO Samuel Allen. “These latter issues have weighed on market sentiment and caused farmers to become more cautious about making major purchases.”
U.S-China trade negotiations continue next week while a planned American tariff hike on $200 billion of Chinese imports looms on March 2. President Trump has said he might let the March 2 deadline slide if the talks go well.
Deere did bounce back from losses last year to a first-quarter profit of $498.5 million. But its per-share earnings of $1.54 were 26 cents short of Wall Street expectations, according to a survey by Zacks Investment Research.
Revenue was $7.98 billion, or $6.94 billion adjusted for one-time events, which edged out analyst expectations. And the company expects equipment sales to increase by about 7 percent this year, compared with 2018.
Shares in the Moline, Illinois, company fell 1 percent.