A quest by Canadian farmers for equipment to dry their sodden crops is providing some consolation to a slide in storage bins, grain handling giant Ag Growth said, unveiling earnings ahead of forecast.

Group chief executive Rob Stenson admitted he had been wrong-footed by the torrential rains which had seen four times average rainfall pound some areas of Canada in the seeding season, cutting plantings in Saskatchewan, the country's main grain state, by up to 20%.

While being "quick to discount excessive moisture" as a threat to group, given that unlike drought floods are often localised, "I was proved wrong this spring with unprecedented rainfall and flooding in Western Canada", he said.

The conditions "will negatively impact" sales of farm equipment in the region, which typically accounts for 25% of group sales, Ag Growth said, noting that volumes of grain storage and handling equipment had already been affected.

Need for air

However, while farmers appeared to be prepared for lower volumes of grain, they were intent on preserving the condition of the crop that did make it to harvest.

"Strong sales for aeration and fans are being supported by the wet and late conditions faced by farmers," Mr Stenson said.

Furthermore, the company was enjoying "solid" demand in the US, where farmers are expected for a second year running to notch up a record crop.

Group earnings of Can$12.4m for the April-to-June quarter, while down 24% year on year, equated to Can$0.90 a share, higher than the Can$0.80 a share analysts had expected.

'Infrastructure deficit'

Mr Stenson also noted a revival in sales of equipment to commercial buyers, now credit conditions had improved.

"Order backlogs are substantially up from last year," he said.

"With a return to more normal credit conditions, spending on upgrading handling infrastructure has resumed."

He added that with grain volumes increasing, "there is a grain handling infrastructure deficit to be addressed in the years ahead.

"This bodes well for our commercial divisions and validates our diversification into this space."

Share upgrades

Analysts at both CIBC and Macquarie raised their price target on Ag Growth shares on Friday to Can$42.

CIBC, which had previous target of Can$40, rated the stock "sector performer", with Macquarie, which had targeted Can$41, giving the shares an "outperform" commendation.

The stock closed Can$0.99 higher at  a four-month high of Can$37.74 in Toronto.