Lindsay Corporation became one of the first agribusiness
groups to acknowledge a dent to its prospects from the Crimea crisis, which is adding
to pressure on profits from lower grain prices.
The owner of irrigation brands such as Lakos and Zimmatic
said that its performance in the December-to-February quarter had already been
hit by the "significant decline" year on year in agricultural commodity prices,
and by the waning of drought conditions in the US.
The proportion of the Midwest, the major US corn and soybean
growing area, in drought fell to 11.6% at the end of February, from 47% a year
before, official data show.
Lindsay reported a 30% drop to $13.45m in earnings for the
quarter, on revenues down 13.0% at $152.8m.
A 16% drop in irrigation revenues more than offset a rise in
sales at the group's smaller road infrastructure business.
Rick Parod, the Lindsay chief executive, said that the
political row fostered by Russia's annexation of the southern Ukrainian region
of Crimea had added to the group's headwinds.
"Lower grain prices and the political environment regarding
Russia and Ukraine are likely to pressure irrigation demand in the second half
of the year," the March-to-August period for Lindsay.
The US-based group flagged "potential government sanctions
for the Russia/Ukraine region", besides cautioning that at its foreign
operations "large irrigation project delays are likely from lower commodity
In fact, revenues were already decline in Russia and Ukraine
ahead of the Crimea crisis, as well as in the Middle East, where Lindsay is
close to fulfilling a large order in Iraq.
The group in its 2012-13 financial year reaped 38% of its
revenues from foreign markets, including to "large agricultural projects" in
Many other groups, such as Ag Growth International and
Glencore, have shrugged off the threat to their prospects in agriculture from
the Crimea turmoil, although some smaller grain merchants in Ukraine are believed to be struggling with higher costs of credit forced by the crisis.
However, Mr Parod forecast that Lindsay would return to
"While we anticipate a decline from peak irrigation revenues
for the near-term, drivers for the company's markets of population growth,
expanded food production and efficient water use, support our expectation for
long-term growth," he said.