Farm-equipment manufacturer Deere & Co. said Wednesday it lowered its full-year forecast after missing third-quarter expectations due to weaker international demand and production delays.

Shares fell 7 percent to $74.57 in late morning trading.

The Moline-based company said its net income for the quarter rose 11 percent, to $788 million, or $1.98 per share, from $712 million, or $1.69 per share, a year earlier. Revenue was $9.6 billion. Analysts expected earnings of $2.32 per share, on revenues of $9.5 billion.

Deere lowered its full-year net income forecast to $3.1 billion from $3.4 billion.

Deere said it is facing weaker demand in South America, India and China for the company's agricultural machinery. The company expects sales in Argentina to be down 5 to 10 percent due to economic uncertainty and a drought.

In North America, agricultural equipment sales are expected to be up more than 10 percent for the year, while European sales are expected to be flat.

Despite concerns that an ongoing drought in the U.S. would reduce sales of tractors and combines in 2013, Deere said it expects the dry weather to tighten global grain supplies, resulting in higher commodity prices and a robust 2013-growing season.

The U.S. is experiencing its most severe drought in at least half a century. The worry is that farmers will hold on to cash instead of buying equipment. Deere contended that most crop farmers have insurance to protect them from loses and that Congress is expected to provide disaster assistance to livestock farmers. That money, the company said, has historically been treated by farmers as regular revenue.

"The drought has minimal impact on our third quarter results and the same holds true for our full year forecast," Susan Karlix, Deere's manager of investor communications, said during a conference call.

However, Deere's economist J.B. Penn acknowledged that the greatest risk in the business is the continuation of adverse weather in various parts of the world. In India, for instance, a diminished monsoon season has lowered grain output, which in turn, has affected tractor sales now forecasted to be down slightly.

"If we continue to have a prolonged drought, then of course that's going to reduce output and keep prices high and affect farmers' bottom lines, of course," Penn said in response to analyst questions about weather-related headwinds for next year.

Production delays

Deere said it experienced production delays of up to 14 days during of a new combine line. Due to the delays, some machines would have been shipped too late for harvest, thus the company has allowed dealers to cancel orders, which will result in an increase in inventory.

"We know less-than-stellar execution is not what you expect from John Deere," James Field, Deere's chief financial officer, said in the call.

The company pinned the delays on an increase in unique part numbers for the new combines and new employees needing extensive training. "To top things off, we were running factory at full speed so there was no down time to get caught up once we fell behind," Field said.

Deere declined to answer additional questions about the delays, other than saying it continues to ramp up schedules.

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