By Shivansh Tiwary

(Reuters) – Deere & Co beat analysts’ expectations for third-quarter profit on Thursday as tighter pricing and cost control measures protected the company’s margins from weak demand for farm equipment.

Shares of the world’s largest agricultural equipment maker rose 6 percent, pushing rival Caterpillar, which also reported a profit increase last week due to slowing demand, up nearly 3 percent.

Higher prices introduced two years ago due to supply chain problems and a surge in demand for industrial and agricultural equipment have helped U.S. machinery makers protect their profits from an industry-wide slump.

“Deere’s pricing power was clearly evident in the third quarter as price helped mitigate the impact of declining volumes,” said Jonathan Sakraida, analyst at CFRA Research.

Deere was able to maintain its net profit at about $7 billion in 2024, even as new machine sales declined due to falling crop prices and high credit costs, which also forced dealers to limit inventory buildups.

In the United States, farm incomes are expected to decline significantly in 2024 due to sharp declines in commodity prices, increased production costs, and declining government support.

“By keeping our inventory levels under control, we were able to achieve solid pricing,” said Josh Beal, director of investor relations at Deere.

Deere also said it expects better price realization in the agricultural segment in 2024 compared to its previous targets.

For the third quarter, Deere reported net income of $6.29 per share, compared to the LSEG estimate of $5.63, while net sales and net income fell 17% to $13.15 billion.

“We have prudently and proactively adjusted production plans in our large agricultural business more quickly than ever before to reduce field inventories in our end markets,” said CEO John C. May.

Deere announced in June that the company would cut some manufacturing jobs and reduce the number of employees in order to keep costs under tight control.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shinjini Ganguli)