John Deere warns that 2016 will be worse than this year for the farming business (DE)

By: Business Insider

November 25, 2015 at 08:11 AM EST

REUTERS/Brent Smith

John Deere reported fourth-quarter earnings on Wednesday morning that topped forecasts.

But the farming industry has been getting slammed by falling crop prices, and the world's largest maker of farm equipment says its performance next year will be worse.

"Although our forecast calls for lower results in the year ahead, the outlook represents a level of performance that is considerably better than we have experienced in previous downturns," CEO Samuel Allen said in the earnings statement.

For the fourth quarter, it reported a slide in sales and revenues that still topped analysts' expectations, but its forecast for 2016 profits topped forecasts.

Net income fell 20% year-on-year, to $1.08 per share from $1.83, still beating the forecast for $0.75 according to Bloomberg.

Net sales and revenues dropped 25% to $6.7 billion, topping the forecast for $5.9 billion. Full-year sales fell 20% to $28.9 billion.

But equipment sales dropped more than expected, by 26% to $5.93 billion ($6 billion expected).

Shares jumped by as much as 5% in pre-market trading after the earnings release.

Here's a look at John Deere's 2016 forecasts from its earnings presentation:

Crop prices have been sliding, and the US Department of Agriculture already forecast a 21% drop in farm incomes this year.John Deere

The company's latest forecast for commodity prices are lower.John Deere

Here's the outlook for declining sales.John Deere

The outlook for the EU is tempered by risks.John Deere

For other major markets, it's a mixed picture.John Deere

See the rest of the story at Business Insider