By Joe Deaux

Deere & Co., which raised it 2022 forecast on Thursday, injected a note of caution on the outlook as ongoing supply-chain bottlenecks weigh on the farm-machinery maker’s efforts to keep up with robust demand.

Price increases and higher sales volumes are helping Deere stay ahead of escalating raw-materials and shipping costs. But while analysts including those at Bloomberg Intelligence see signs that supply-chain snags may be easing, Deere executives said on a quarterly earnings call that the concerns are likely to persist this year.

“It’s unpredictable and difficult to forecast, which also is driving higher freight costs,” Josh Jepsen, director of investor relations, said on a call with analysts. “We need to accelerate things to get them into the factories to keep production moving. Those I would say are impacts that are weighing on the business as we go forward.”

The comment was in response to an analyst who suggested that Deere’s raised forecast for 2022 wasn’t as robust as some had expected given the booming farm economy. Deere and other equipment manufacturers are benefiting as higher crop prices boost farmers’ incomes, giving them the wherewithal to replace aging tractor fleets.

Shares fell 3.4% by 1:31 p.m. in New York, along with a slump in the broader equities market. The stock has climbed about 7% this year.

The company forecast 2022 net income of $6.7 billion to $7.1 billion, up from a prior range of $6.5 billion to $7 billion, according to a statement on Friday. In the first quarter ended Jan. 30, net income per share was higher than the average of analysts’ estimates compiled by Bloomberg.

The results come even after the company’s first strike since the 1980s resulted in weeks-long delays for parts orders during the busiest season of the year. 

Deere said Friday said it incurred a cost of $90 million in the first quarter tied to a signing bonus for union employees. 

The company forecasts net sales in its production and precision ag business to rise 25% to 30% in 2022, while its small ag and turf will rise about 15%. Sales in the construction and forestry business will climb 10% to 15%. 

Competitor AGCO Corp. earlier this month said supply-chain issues will begin to ebb this year, but that semiconductor hangups will last through the end of 2022.

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