John Deere Is Getting Whacked By A 'Global Farming Recession'

The world's largest farming-equipment maker reported lower profits and sales for its second fiscal quarter ahead of the opening bell Friday, and it cut its outlook for the year.

"John Deere's second-quarter performance reflected the continuing impact of the downturn in the global farm economy and further weakness in the construction equipment sector," CEO Samuel Allen said in the earnings statement.

The company said it expected full-year net income to be $1.2 billion, down from the February forecast of $1.3 billion. It forecast that sales of agricultural equipment in the US and Canada would fall 20% year-on-year.

But it changed its projected full-year sales decline to 9%, a hair better than the previous 10%.

A downturn in grain prices has hurt makers of agricultural equipment, though some grain prices including corn have recently risen. In its full-year outlook released in February, Deere said it expected 2016 to be another challenging year.

"Although our forecast calls for lower results this year in light of ongoing market pressures, Deere is continuing to perform at a much higher level than in previous downturns," Allen said Friday.

Adjusted earnings per share in the latest quarter came in at $1.56, beating the forecast for $1.47, according to Bloomberg.

Deere shares fell about 1% in premarket trading. Through Thursday's close, they had rallied 8% this year.