By Sagarika Jaisinghani
(Reuters) - Deere & Co (N:DE) said it expected equipment sales to fall further as lower grain prices discourage farmers from buying tractors, harvesters and other machinery.
Shares of the world's largest farm equipment maker fell as much as 4 percent in premarket trading.
Deere's sales have been hit as bumper corn harvests drive down prices, leaving farmers with less cash to spend on equipment. Corn prices have fallen about 11 percent this year so far, on top of a decline of nearly 40 percent last year.
"The slowdown has been most pronounced in the sale of large farm machinery, including many of our most profitable models," Chief Executive Samuel Allen said in a statement on Wednesday.
Deere gets more than two-thirds of its revenue from farm and turf machinery.
The Department of Agriculture said on Tuesday that falling grain prices and rising costs would drag down U.S. farm sector profits in 2014 to their lowest since 2010.
Moline, Illinois-based Deere cut its forecast for corn price next year to about $3.45 per bushel from $4.10. It also reduced its estimates for wheat, soybean and cotton prices.
Sale of farm machinery in North America is expected to fall 25-30 percent industry-wide next year, Deere said.
The company has cut jobs and scaled back production of farm equipment to match demand. Deere said in August that it would lay off more than 1,000 employees at five U.S. plants.
"We believe Deere will be aggressive in cutting production - the company plans to cut inventory even against this weak sales forecast - which suggests that (the current quarter) could be a particularly weak quarter," Jefferies & Co analyst Stephen Volkmann wrote in a note.
Deere, which also makes construction equipment, said it expected overall machinery sales to fall about 21 percent in the first quarter ending Jan. 31.
Net income attributable to the company fell to $649.2 million, or $1.83 per share, in the fourth quarter ended Oct. 31 from $806.8 million, or $2.11 per share, a year earlier.
Revenue fell 5 percent to $8.97 billion.
Deere's shares were down 2 percent at $85.87 in trading before the bell.
Up to Tuesday's close, the stock had risen about 11 percent from its two year-low of $78.88 touched on Oct. 8.
(Editing by Saumyadeb Chakrabarty, Ted Kerr and Kirti Pandey)