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John Deere’s profit during its fourth quarter decreased 8 percent. The company issued a weak forecast for 2020 as U.S. trade disputes and bad weather squeeze its biggest customer, the American farmer. It’s the first time the manufacturer laid out its expectations for next year; the forecast caused share prices to decrease about 4 percent. But share prices of Deere & CO. are still better for the year by 15 percent.

The company stated it expects sales of agriculture and turf machinery to decrease 5 percent to 10 percent compared with this year, and sales of construction and forestry equipment to decrease 10 percent to 15 percent. That outlook reflects slowing construction activity, which has been an area of strength.

“John Deere’s performance reflected continued uncertainties in the agricultural sector,” CEO John May said. “Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment.”

Quarterly profits were $722 million – $2.27 per share. Adjusted per-share earnings were $2.14, a penny better than expected, according to a survey by Zacks Investment Research. Adjusted revenue was $8.7 billion, also better than expected. Annual revenue increased 5 percent to $39.26 billion.

But that was overshadowed by the first peek into 2020 for the company based in Moline, Illinois. The company expects to book profits between $2.7 billion and $3.1 billion. That would be less than the $3.25 billion it made this fiscal year even if it reaches the better end of its forecast.

Farmers have pulled back on buying machinery partly because of so much uncertainty regarding what comes next in the trade war between the United States and China. Farmers in the Midwest and South had planting this year interrupted by wet weather. Some northern states have seen harvest prospects go from bad to worse. Early rain and snow in Wisconsin, Minnesota and the Dakotas hampered an already difficult harvest.

Deere has focused on factors it can control. May said despite a difficult environment right now, the longer-term outlook for the company is healthy.

“We are committed to the successful execution of our strategic plan and have initiated a series of measures to create a leaner organizational structure that can operate with more speed and agility,” he stated.

U.S. President Donald Trump began imposing punitive tariffs on Chinese exports about a year and a half ago. Since then tariffs have been increased by both sides on billions of dollars’ worth of exports from each country, squeezing farmers and manufacturers. Confusion remains about the state of trade relations between the two economic powerhouses. China’s Commerce Ministry said Nov. 26 that negotiators for both sides had spoken on the phone and agreed to more talks aimed at reaching a deal. The same day Trump said the two sides were “in the final throes of a very important deal.”

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