Deere & Company announced it was moving to scale back production in its major equipment operations and that, partly as a result, earnings for the second quarter ending April 30 were likely to fall below year-earlier levels.

"Continued caution on the part of customers has prompted our decision to reduce production schedules," said Robert W. Lane, chairman and chief executive officer. "Such steps this early in the season affirm our continuing commitment to rigorous asset management."

Products primarily affected include construction and grounds-care equipment, but also include large farm tractors, he said. As a result, the company’s forecast for physical volume of sales has been reduced for both the quarter and full year.

In construction equipment, the retail-sales slowdown has extended through mid-March. Deere’s production levels have responded quickly to the retail environment due to its estimate to cash order-fulfillment process, which adjusts construction-equipment production directly in line with order activity.

Production schedules are also being reduced in the company’s commercial and consumer equipment unit, where adverse weather is having a negative effect on income at this time.

In another Deere news, a recent fire, at a storage facility near Davenport, IA, destroyed certain attachments and commercial grounds-care products. Although contents and business interruption are covered by insurance, any related loss of sales could have an adverse short-term impact on the division’s financial results. The fire’s effect should be largely offset in future quarters, however.