Deere DE +2.42% & Co. said its fiscal fourth-quarter earnings rose 17%, but the company forecast lower sales in 2014 as demand for farm machinery shrinks throughout the world.
The world's sales leader in tractors and harvesting combines topped fourth-quarter expectations. The company's sales and profit outlooks for 2014 also were better than anticipated, providing a measure of relief for investors bracing for sharp decline in farm equipment demand.
Deere's results provided further evidence that the prolonged run of elevated demand for farm machinery is ending as prices for corn, soybeans and other farm commodities retreat, providing farmers with less money to spend on equipment.
The Moline, Ill., company expects industrywide sales of farm machinery in the U.S. and Canada in 2014 to be down 5% to 10% from 2013. In South America, a particularly strong market in 2013, Deere expects sales to slip by 5% to 10% next year. Meanwhile, in western Europe, the company anticipates a 5% decrease in industrywide farm equipment sales.

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Deere expects its own sales performance to be better than the industry, predicting a 6% decline in agricultural equipment sales with most of that drop coming from the sale of the company's landscaping distribution business.
For the fiscal year starting Nov. 1, Deere forecast earnings of $3.3 billion, or roughly $8.55 per share. Analysts had been expecting profit of $3.04 billion, or about $8 per share. Some analysts said they're skeptical of Deere's more optimistic forecast.
"We believe Deere's outlook sets up for disappointment as the year progresses," said Lawrence De Maria, an analyst for William Blair & Co. "We believe the overall fundamental outlook for agriculture is especially vulnerable over the next few years."
The company expects improvement in its construction equipment business in 2014 after disappointing results in 2013. Deere forecast a 10% increase in construction and forestry equipment from 2013, as an improving home construction market in the U.S. drives higher sales.
For the fourth quarter, construction equipment sales slipped 8% to $1.52 billion, while profit decreased 2% to $118 million.
Fourth-quarter sales of farm machinery dropped 4% to $7.1 billion, but profit rose 7% to $996 million, as higher prices for equipment helped to offset lower production volumes.
For the quarter ended Oct. 31, Deere reported a profit of $806.8 million, or $2.11 a share, up from $687.6 million, or $1.75 a share, a year earlier. Revenue, which also includes the company's financing unit, decreased 3.4% to $9.45 billion, with unfavorable currency-translation impacts of 2%.
Analysts polled by Thomson Reuters expected per-share earnings of $1.89 and revenue of $8.68 billion.
—Tess Stynes contributed to this article.
Write to Bob Tita at