Signs that the hard-hit farming sector is regaining traction helped drive Deere's quarterly profit much higher than analysts expected. That offset weak demand for the company's construction machines. The company known for its green tractors was able to boost that operating profit for its farming business by lifting prices and cutting production costs and warranty expenses.
Deere's CEO said confidence in the farming sector has improved, now that the U.S. has reached an interim trade deal with China. That has lifted hopes of a recovery in demand for farm machinery.
Under that deal, China agreed to buy another $32 billion in U.S. farm products over two years.
That would help Deere because the agriculture business makes up nearly 60% of its revenue. Deere is sticking to its full-year earnings forecast that still calls for a sales decline.
But investors cheered the results, pushing Deere shares up sharply in early trading Friday.