CHICAGO (Reuters) – Deere & Co (DE.N) on Friday reported an unexpected rise in first-quarter profits, helped by early signs of stabilization in the U.S. farm sector.

The farm equipment manufacturer reported net income of $517 million or $1.63 per share for the quarter ended Feb. 2, up from $498 million or $1.54 per share in the same period last year.

That compares with average analyst estimates of $1.26 per share, according to Refinitiv Eikon data.

Deere’s earnings in the past quarters were buffeted by a nearly two-year-long U.S.-China trade war that hit U.S. agricultural exports, leaving farmers struggling to turn a profit.

But President Donald Trump’s interim trade deal with China has raised hopes of a recovery in farm machinery demand.

“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports,” Chief Executive Officer John May said.

Improved pricing power along with lower production costs and warranty expenses in the latest quarter drove up operating profits at its farm and turf business, which accounts for nearly 60% of Deere’s revenues.

Reporting by Rajesh Kumar Singh; Editing by Jan Harvey and Jane Merriman

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