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Deere to Make 8R Tractors

Zacks Equity Research

In an attempt to meet growing customer demand for high horse power tractors in Brazil, Deere & Company (DE) will spend around $40 million to manufacture its 8R tractors at its plant in the city of Montengro.

The 5R, 6R and 7R Series of tractors are currently being manufactured in Deere’s Montenegro facility. The production of the 8R model designed with significant technology will increase customers’ productivity with more power and less fuel consumption.

The New 8R series tractor will open up a new financing option, FINAME. The program is aiming to finance the acquisition of new machinery and equipment made in Brazil, accredited by BNDES (The Brazilian Development Bank).

Deere currently manufactures 8R tractors in the Waterloo, Iowa, plant and expects to produce it in Brazil by late 2015. Deere also expects that the investment will increase its use of suppliers in the region alongwith the growth in the Agriculture & Turf Division.

The agriculture sector is in for a boom time with the U.S. Department of Agriculture (:USDA) forecasting a record net farm income of $120.6 billion in 2013, a 6% year-over-year rise triggered by record crop production.

Deere reiterated worldwide sales growth guidance of Agriculture and Turf equipment at 7% for fiscal 2013. Higher commodity prices and strong farm incomes are expected to boost demand for farm machinery during the year. Furthermore, increase in global demand for food, shelter and infrastructure confirms that the long-term outlook for Deere remains compelling.

Moline, IL-based Deere is engaged in the production and distribution of agricultural and forestry equipment, construction equipment and engines worldwide. The company sells products in the U.S. and Canada through branch offices as well as through distributors and dealers for the resale of products internationally.

Deere currently holds a Zacks Rank #3 (Hold).

Other stocks in the industrial products sector with a favorable Zacks rank are Alamo Group, Inc. (ALG) and Kubota Corp. (KUBTY) with a Zacks Rank #1 (Strong Buy), and Lindsay Corp. (LNN) with a Zacks Rank #2 (Buy).

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