Deere & Co. (NYSE: DE) reported fiscal third quarter 2014 results before markets opened Wednesday morning. For the quarter, the farm and heavy equipment maker posted diluted earnings per share (EPS) of $2.33 on revenues of $9.5 billion. In the same period a year ago, the company reported adjusted EPS of $2.56 on revenues of $10.01 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $2.20 and $8.75 billion in revenues.

The company cut its full-year net income expectation from $3.3 billion to $3.1 billion and said it expects a sales decline of about 6% for the full year and a drop of 8% in the fourth quarter. The estimates include a 1% negative impact from currency translation effects. In fiscal year 2013, the company’s revenues totaled $35 billion, from which we calculated total revenue for 2014 of around $32.9 billion based on the company’s sales decline forecast. The current full-year consensus estimates call for EPS of $8.40 on revenues of $33.56 billion.

The company’s CEO said:

Deere’s third-quarter performance reflected moderating conditions in the global farm sector, which have negatively affected demand for farm machinery and contributed to lower sales and profits for our agricultural-equipment business. At the same time, our construction and forestry and financial services divisions had higher profit, showing the benefit of a broad-based business lineup. Overall, it was a quarter of solid performance, with income exceeded only by last year’s record for the corresponding period.

Sales in the company’s agriculture and turf division dropped 11% year-over-year in the quarter, and construction and forestry equipment sales were up 19%. Deere now expects agriculture and turf sales to fall 10% in the 2014 fiscal year, almost entirely due to a decline of 10% in agricultural machinery sales. Construction and forestry equipment sales are expected to come in flat to 5% higher for the year.

Deere managed to rescue the quarter by increasing its margins to offset the drop in sales volume. Net income for the quarter fell from $996.5 million in the year-ago quarter to $850.7 million. Price realizations of 2% helped offset the effects of lower sales, higher costs, and negative currency translation effects. The best thing to say about this quarter is that it could have been a lot worse.

Shares of Deere were trading down about 0.8% in the pre-market this morning, at $85.75. The 52-week range is $80.76 to $94.89. Thomson Reuters had a consensus analyst price target of around $89.00 before Wednesday’s report.

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