Titan Machinery forecast its agriculture sales growth holding steady this year despite the coronavirus pandemic, as takings from keeping farmers’ ageing machinery on the go picked up the slack from weakened sales of new equipment.
The US-based dealer in Case and New Holland machinery – reintroducing public forecasting, which it had suspended during the peak of the pandemic – said that its agriculture division would see growth in revenues of 0-5% in the year to January 2021.
That compares with 3.1% expansion, to $749.0m, in the year to January 2020.
David Meyer, the Titan Machinery chairman and chief executive, flagged the company’s “belief in a stabilising agriculture business”.
While deterioration was expected in the group’s construction business - where sales were seen falling by 5-10% this year compared with 6.0% growth last year - and in international - forecast to see revenues drop by 10-15% compared with 1.4% expansion last time – Titan Machinery saw its earnings holding firm nonetheless.
It forecast adjusted earnings of $0.65-0.85 per share for the current financial year, compared with a $0.79-per-share figure last year.
The forecast was also well above the $0.34-per-share result that Wall Street has pencilled in, according to Refinitiv.
Titan Machinery shares soared 15.4% to a seven-month high of $14.24 in early deals in New York, befor eeasing back to $13.61, up 10.3% on the day.
New vs used and existing
The comments came as Titan reported adjusted earnings of $0.29 per share for the May-to-July quarter – contrasting with investor expectations of a $0.02-per-share loss.
The group acknowledged a “continued lower base of industry tractor and combine sales” as dents to sector confidence from weakened prices and Covid-19 factors curtailed farm equipment spending.
However, it noted too “stability in used equipment pricing” as demand turned to second-hand machines, and also a boost to its servicing and parts operations as “farmers are extending age and hours in their current fleet”.
This helped limit to 3.7%, to $303.5m, the drop in group revenues for the quarter.
Meanwhile, costs were held in check by measures including a squeeze on inventories of unsold stock, with inventory of both used and new machinery falling for a second successive quarter.
“We generated a solid second quarter top and bottom line performance amid an uncertain environment,” Mr Meyer said, highlighting “the challenging industry conditions created from the Covid-19 pandemic.
“Our team has met the recent challenges by successfully reducing expenses and strengthening our balance sheet.”