Drought worries drive Lindsay profits up five-fold

Shares in Lindsay Corporation echoed those in agribusiness peer Monsanto by hitting a four-year high after the irrigator maker unveiled a rush in sales to US farmers concerned over further drought.

The Nebraska-based company revealed a five-fold jump to $14.7m in earnings in the September-to-November quarter, equivalent to $1.15 a share.

The result was well ahead of the $0.75-a-share result that Wall Street had expected.

And while Lindsay chief executive Rick Parod remained cautious on the company's outlook - saying that the result "represents pulling forward in order volume, at least in part, from the second half" of the group's financial year the results were well received by investors.

Lindsay shares hit $88.54 at one point, the highest since September 2008, before closing at $86.03 in New York, a gain of 7.5% on the day.

'Very concerned about drought'

The earnings rise reflected a jump of 59% to $96.5m in sales of irrigator to US growers, whose crop yields were dented by the worst drought since 1956.

"At drought conditions across the US pushed commodity prices higher through the summer and fall months, the realisation of the importance of efficient mechanical irrigation rose creating robust market conditions," Mr Parod said.

The largest sales increases came "in the drought-impacted Corn Belt".

"What we're seeing is farmers are very concerned about the drought and the potential future impact of more drought or dry weather."

However, growers were "obviously pulling forward, to some degree, some of those applications that we think eventually would take place any way, whether it was later this year or next year or the year after", he told investors.

Middle East slowdown

The surge in domestic irrigator sales outpaced a 6% increase to $37.7m in sales of irrigation abroad, "due to lower project revenues in the Middle East", where the group booked takings from a large project a year ago.

"Excluding the Middle East market, the international irrigation revenues showed a high single-digit increase over the previous year's quarter," Mr Parod said.

Sales in Lindsay's infrastructure business, which makes road barriers, sales tumbled 29% to $13.2m.

Group revenues nonetheless rose 24% to $147.4m, thanks to the strong domestic irrigator market.

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