International, unveiling a slide into the red, forecast a continued hangover to
trade from the US drought, but only for the first half of 2013, before the
prospect of a huge harvest revives orders.
The maker of silos
and grain handling equipment said that the dent to demand from a diminished US
harvest last year would continue to overhang trade for now, earnings before
interest, tax, depreciation and amortisation to fall below year-ago levels in
the first half of 2012.
short-term impact of the drought is expected to temper demand for both portable
and commercial grain handling equipment in the US," said Ag Growth, which
is based in Canada, but has the US as its biggest market.
the company's dealer network is slightly higher than typical, reducing their
need to replenish inventory levels, while poor 2012 crop production volumes
have reduced US farmer grain handling requirements."
"new crop season is expected to change these demand dynamics, as the
market begins to focus on anticipated 2013 crop production volumes", the
The US corn is
currently seen setting a record high, above 14.5bn bushels.
Gary Anderson, the
Ag Growth chief executive, said: "It is becoming more apparent that
optimism is returning to the marketplace and based on current conditions we
anticipate a quick return to a positive US agricultural environment.
very enthusiastic with respect to Ag Growth's prospects in 2013 and
for an, eventual, recovery in the US, the company also flagged improved
prospects in markets outside North America, particularly in the former Soviet
Union, where sales topped $30m in 2012.
sales last year rose 32% to Can$71.9m.
quoting activity is at new record highs and the company's international back
order is significantly higher than at the same time in 2012," Ag Growth
The group stopped
short of making a specific forecast for the Canadian market, in which sales
soared 20% to Can$76.2m last year, helped by a recovery in harvest volumes
from moisture-reduced levels in 2010 and 2011.
Into the red
The comments came
as the group unveiled a loss of Can$3.44m for the October-to-December,
compared with earnings of Can$3.25m a year before, on revenues down 10.7% at
US revenues for the
quarter plunged 27% to Can$30.4m.
result, equivalent to an underlying loss of Can$0.11 per share, came in below
expectations of a Can$0.05-a-share profit.
Ag Growth shares closed 3.6% lower at Can$32.12 in Toronto.