Deere & Co. (NYSE: DE) reported first-quarter fiscal 2017 results before markets opened Friday. The farm and heavy equipment maker posted diluted earnings per share (EPS) of $0.61 on revenues of $5.63 billion. In the same period a year ago, the company reported adjusted EPS of $0.80 on revenues of $5.53 billion. First-quarter results also compare to consensus estimates for EPS of $0.54 and $4.67 billion in revenues.

Year over year, quarterly net sales in the worldwide equipment operations group fell 1% overall, including a decline of 8% in the United States and Canada, offset by an increase of 11% elsewhere and helped by a favorable currency exchange effect of 1%.

Operating profit in the equipment group rose from $214 million in the year-ago quarter to $247 million, driven primarily by price realizations and offset somewhat by charges for the company’s voluntary employee-separation program, higher warranty costs and an unfavorable currency exchange effect. Net income fell from $127 million a year ago to $80 million.

For fiscal 2017, Deere now expects equipment sales to increase by about 4% and second-quarter sales to rise by about 1%. Analysts have forecast fiscal year sales of $23.29 billion, a slight decline compared with sales of $23.39 billion in 2016. For the year, analysts expect EPS of $4.52, compared with $4.81 last year.

For the second quarter, analysts are looking for EPS of $1.51 and revenues of $6.96. Based on the year-ago second quarter, that’s a decline of about 2%, compared with the company’s own forecast for a rise of about 1%.

CEO Samuel R. Allen said:

Although the quarter’s sales and earnings were somewhat lower than last year, all of our businesses remained solidly profitable. Deere’s performance showed further benefits from the sound execution of its operating plans, the strength of a broad product portfolio and the impact of a more flexible cost structure. At the same time, we are seeing signs that after several years of steep declines key agricultural markets may be stabilizing. … Deere continues to perform far better than in agricultural downturns of the past. … [O]ur efforts to improve operating efficiency are gaining traction and we remain confident that we can deliver at least $500 million of structural cost reductions by the end of 2018.

Expectations were set low, again, and Deere was easily able to surpass them. The interesting thing is that the company’s own outlook is higher than analysts’ expectations. Whether this is the beginning of a real recovery or just a false start remains to be seen. Revenues were up 2% for the year, but costs rose 2.4% and pretax income slipped from $351.2 million to $328 million. Deere has to do better if this is the start of a real recovery.

Shares of Deere traded up about 2.8% at $112.20 in the premarket on Friday, having closed Thursday at $109.17. The 52-week range is $74.91 to $112.18. The consensus 12-month price target was $102.63 before the report.

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