Machinery Companies Not Doing Good
Several of the farm equipment manufacturers that are publicly traded have recently posted their third quarter earnings. In most cases, these earnings were down from last year’s third quarter and in some cases, the amount was down substantially.
Agco’s net income was down about 90 percent. The company blamed their earnings short fall on two main items:
1. Lower commodity prices, and
2. Tight credit
The company indicated softening demand in North America and Europe, weakness in Russia and Eastern Europe and stabilizing demand in South America. Agco makes equipment under the Massey Ferguson, Challenger, Fendt and Vaitra brand names. Sales were down almost 33 percent, therefore a reduction in net income of about 90% was actually better than most analysts expected.
Lindsay, the maker of irrigation systems indicated that their profit for the quarter dropped 81 percent on a 50 percent drop in sales. Both earnings and sales were substantially less than what the analysts expected. Rick Parod, the company’s CEO said farmers continued to remain cautious about making investments in capital goods.
I will try to update more of these publicly traded companies each quarter as their earnings comes out. You can obtain good trend information from reading their quarterly reports or analysis.