Deere & Co raised its annual profit forecast on Friday, as the world's largest farm equipment maker expects a boost to margins from price hikes and solid demand for its tractors and combines.
Record grain prices have put more cash in farmers' pockets and spurred them to increase investments in agricultural machinery amid a tight labor market, Reuters reported. The US Department of Agriculture estimated net farm income to have risen 25% to $23.9 billion in 2021.
Deere raised prices to combat rising shipping and supply chain costs, but that has not deterred demand, with the company's North American order books full for most of its large farm equipment in 2022.
READ: Deere & Company shares dip as tractor giant sees equipment sales falling in 2020
"Looking ahead, we expect demand for farm and construction equipment to continue benefiting from strong fundamentals," Deere chief executive John May said in a statement.
Deere forecasts fiscal 2022 net income of between $6.7 billion and $7.1 billion, up from its prior expectation of $6.5 billion to $7 billion.
Net sales from equipment operations rose about 6% to $8.53 billion for the first quarter ended January 30. 2022.
Net income fell to $903 million or $2.92 per share from $1.22 billion or $3.87 per share a year earlier, as costs weighed.
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