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Lindsay admits dent to outlook from Crimea turmoil

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.

'Potential government sanctions'

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 prices".

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 Russia.

'Peak irrigation revenues'

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 growth.

"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.

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