Deere & Co. (DE) on Tuesday reported a five-fold increase in quarterly profit, as strong commodities prices and a big U.S. harvest spurred farmers to buy new equipment.

Deere, whose shares rose on Tuesday, also improved its margins, gained market share and benefited from the replacement of aging construction machinery by equipment-rental companies.

Net income rose to $356.7 million, or $1.41 a share, in the fiscal fourth quarter ended Oct. 31, from $70.6 million, or 27 cents a share, a year earlier. Revenue increased 32 percent to $5.207 billion.

"It was a blowout fourth quarter," said Charles Rentschler, an analyst with Langenberg & Co. who has a "hold" rating on Deere. "A lot of that reflects the phenomenal year U.S. farmers have had — bumper corn crops, an excellent soybean crop. Prices are down but yields are up."

U.S. net farm cash income, a measure of farm sector profitability, is projected to increase to a record $77.5 billion in 2004, up 13 percent from 2003, the Agriculture Department said earlier this month.

Although corn and soybean prices are on the wane from recent strong levels, farmers are completing harvest of record corn, soybean, rice and cotton crops.

Deere shares, which rose as much as 4 percent on Tuesday, pared gains later in the session as analysts' enthusiasm was tempered by the company's fiscal 2005 outlook, which projects slower growth. Shares of Deere competitors CNH Global (CNH) and Caterpillar Inc. (CAT) also pared earlier gains.

Deere's first-quarter outlook was in line with analysts' expectations. But the company told analysts and investors on a conference call that it expects weak growth in the second and third quarters and lower fourth-quarter results.

Analysts noted the company expects equipment sales growth to slow next year to between 2 percent and 7 percent. The Moline, Illinois, company also projected 2005 net income of about $1.5 billion, a gain of about 6 percent, or roughly $5.90 to $5.95 a share.

"Deere could be conservative, but that's consistent with what's happening with commodity prices, which have taken a big drop due to increased carry-over (inventories)," said Eli Lustgarten, an analyst with J.B. Hanauer & Co.

He said the forecast is in line with his expectations that the agricultural equipment cycle will peak in the coming year.

Lustgarten said the company's projected first-quarter net income of about $200 million to $225 million translates to about 80 cents to 90 cents a share.

Analysts' first-quarter estimates have ranged from 65 cents to $1.00 a share, for an average of 85 cents, according to Reuters Estimates.

On its conference call, the company said 2005 net income will be pressured by its plans to reduce inventories and receivables by about $800 million. It also put U.S. farm cash receipts for next year at $239 billion vs. $240 billion in 2004.

Deere said its order book is stronger than it was at this time in 2003, even though special depreciation allowances will be expiring at year end.

The company said its equipment division showed the strongest gains in the most recent quarter, with sales up 37 percent. Increased shipments and higher selling prices were somewhat offset by a larger provision for employee bonuses and higher raw material costs, it said.

Deere shares were up $1.44, or 2.1 percent, at $70.15 on the New York Stock Exchange on Tuesday afternoon, off an earlier high at $71.44.