Deere & Co. (NYSE: DE) reported second-quarter fiscal 2016 results before markets opened Friday. The farm and heavy equipment maker posted diluted earnings per share (EPS) of $1.56 on revenues of $7.88 billion. In the same period a year ago, the company reported adjusted EPS of $2.03 on revenues of $8.17 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.48 and $6.71 billion in revenues.

Year over year, net sales fell 6% in the United States and Canada and 1% elsewhere, and currency exchange rates had a negative impact of 4% on revenues. Lower profits for the quarter were due primarily to lower shipment volumes, the unfavorable effects of foreign-currency exchange and the impact of a less favorable product mix. Lower SG&A costs, lower production costs and higher price realizations partially offset the unfavorable factors.

For 2016 Deere expects equipment sales to decline by about 9% and third-quarter sales are forecast to fall 13% compared with the third quarter of 2015.

Net income for the year is now forecast at $1.2 billion, down from a prior estimate of $1.3 billion and down from 2015 net income of $1.94 billion. Based on 316.5 million diluted shares outstanding, that works out to about $3.79 per share.

Consensus estimates for Deere’s fiscal third quarter call for EPS of $1.12 and revenues of $6.2 billion. For the full year, analysts are looking for EPS of $4.08 and revenues of $23.13 billion.

CEO Samuel R. Allen said:

John Deere’s second-quarter performance reflected the continuing impact of the downturn in the global farm economy and further weakness in the construction equipment sector. In the face of challenging market conditions, Deere’s businesses benefited from the sound execution of operating plans, the strength of a broad product portfolio and our success creating a more flexible cost structure. … Although our forecast calls for lower results this year in light of ongoing market pressures, Deere is continuing to perform at a much higher level than in previous downturns.

Although the company beat both earnings and revenue expectations, but the bar had been set very low. The new forecast for lower net income is not good news.

Shares of Deere were down 1.3% to $81.25 in the premarket Friday. The 52-week range is $70.16 to $98.23. Thomson Reuters had a consensus analyst price target of $75.58 before the report.

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