DEERE & CO, the world‘s largest manufacturer of agricultural machinery, has reported an 86% increase in earnings for the second quarter of this year, reports the Financial Times .

The company has also forecast robust growth across all product lines because of the continued strength of the US agriculture sector.

The rise in earnings is attributed to the rise in farm incomes from last year‘s harvest. The company also admitted that US farm subsidies played a vital role.

Net income rose 86% from $256m (£143m) to $477(£266m) for the quarter with global sales rising 34% to $5.8bn (£3.2bn).

Deere & Co chief executive Bob Lane said the company was “profitably expanding” and that it had benefited from an aggressive asset management strategy.

One of the key factors behind the improved fortunes is the way in which Deere managed its inventory levels across what is a naturally cyclical industry, he said.

In spite of a 34% rise in sales, inventory levels were flat following a programme of “lean and efficient inventory levels”.

“The company is in a position to fully participate in the recovery now under way on our key markets and realise improved cash flow,” said Mr Lane.

The paper reports that sales for the quarter rose 29% for the quarter and 29% for the last six months.

Deere said it expected equipment sales this year to rise by about 25% with net income forecast at about $1.2bn (£669m).

But the company warned that retail sales in western Europe would be slightly down due to the fall in farm incomes following a recent drought.

Deere shares, which have rose 48% during the last 12 months, were trading at $64.89 (£36.20) by midday in New York on Tuesday (May18).