Deere & Co, the world’s largest maker of farm machinery, warned that rising raw materials costs would hit profit margins, sending its shares down sharply, even as the company reported stronger earnings amid the global agricultural boom that is boosting demand for its products.

Net income was $575m, or $1.32 per share, up 7 per cent from $537m a year ago. The earnings were a record for the quarter, thanks to strongly higher international demand for farm equipment, but they missed analysts’ expectations of earnings of $1.36 share.