Deere has announced a 5% increase in first-quarter profits on the back of stronger equipment sales.

Deere said it earned $681.1 million, or $1.81 a share, last quarter, compared with a profit of $649.7 million, or $1.65 a share, a year earlier.

Global sales, including finance revenues were up 3% to $7.65 billion. Equipment sales increased 2.3% to $6.95 billion, exceeding a forecast of $6.62 billion.

"With another record quarter, John Deere has started 2014 on a strong note," Deere CEO  Samuel Allen said in a statement. "Even in the face of moderating demand for agricultural equipment, Deere is well-positioned to deliver solid performance"

However, Deere is projecting its total sales will drop three per cent in 2014 as the anticipated fall in US farm incomes this year will dampen demand for large agricultural equipment, such as tractors and combines, and forecasts that industry sales for agricultural machinery in the US and Canada will decline five per cent to 10 per cent for the year.