AgJunction dashed expectations of a rise in earnings this
year, blaming "general weakness in the agriculture industry", evident in particularly
in the large tractor and combine markets important for the group.
The US-based maker of satellite guidance and mapping
technology, with operations in likes of soil analysis too, said that it would
report a year-on-year decline in revenues and earnings both for the April-to-June
quarter and for the whole of 2014.
Although investors had expected a small drop in AgJunction's
performance this quarter, they had expected a recovery later in 2014 to drive
full-year earnings to $3.26m, a rise of 23%.
AgJunction shares, which are listed in Toronto, tumbled 12.9%
to Can$0.81, their lowest since May last year.
Rick Heiniger, the group's chief executive, said last month that
while the North American market had proven "soft" in the January-to-March
quarter, AgJunction was "confident in our growth prospects as markets improve".
While North American sales fell by 32%, those in Europe
soared 70%, with Mr Heiniger flagging in particular AgJunction's growth in sales
direct to farm equipment manufacturers.
However, on Monday he warmed that "general weakness within
the agriculture markets in the first quarter of 2014 has continued into the
second [April-to-June] quarter, resulting in lower year-over-year sales volumes".
'Mood is less
The comments come amid signs of weakened agricultural
machinery markets in many countries, with orders undermined by prospects for lower
profits for farms squeezed by broadly lower crop prices and higher costs for
the likes of seeds and agrichemicals.
In the US, sales of combines and four-wheel drive tractors, in
which satellite technology is frequently installed, fell by 8.2% and 7.0% respectively
in the first four months of 2014, according to the Association of Equipment
Canadian combine sales fell by 12.3%, and those of four-wheel
drive tractors by 21.2%.
Meanwhile in Europe, "the overall mood is less positive than
last year", the CEMA industry group said last week, highlighting forecasts for
a contraction of 5% in Germany, the European Union's second-biggest grains
producing country, and of up to 10% in top-ranked France.
Poland, the EU's third-biggest grains grower, and crisis-hit
Ukraine will also see "considerably lower demand", the association said, although
it added that demand in most European markets, including Belgium, Spain and the
UK, was "stable at high levels".
European tractor registrations fell by about 1% in the first
three months of 2014, "a trend that is expected to continue throughout the
remainder of the year", CEMA said.
Farm equipment giant Deere & Co, the maker of John Deere
machinery, has also warned over former Soviet Union market, cautioning over knock-on
effects of the Ukraine crisis.
"Market conditions in the Commonwealth of Independent
States have weakened and industry sales there are expected to be down
significantly for the year," Deere said last month, warning of a
"general slowing" of economic growth and "ongoing restriction of
Russian sales of four-wheel-drive tractors have actually held up well, coming in flat for the first three months of 2014, according to industry group Rosagromash.
However, combine sales tumbled 30% to 741.