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Farm irrigation spending still low, despite crop price rise

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Irrigation equipment manufacturer Lindsay has reported falling sales, as continued low crop prices slow farmer investment, with the US particularly hard hit.

"Irrigation results reflect continued headwinds from low commodity prices and farm income," said Lindsay chief executive Rick Parod.

Lindsay noted heavy grain stocks, and an expected large US harvest, "compressing commodity prices" and sapping farm income.

Falling revenues, income

Across its infrastructure and irrigation businesses, Lindsay's total revenues over the three months to May 31 were 141.3m, down 12.0% year on year.

Profits were down 25.6%, at 9.6m.

Total revenues from Lindsay's irrigation segment were down 11% year on year over the three months to May 31, at $117.3m.

Squeezed US budgets

Revenues in the US were hit by slower sales volumes, and lower prices, falling 18% to $73.4m.

The company noted that US farm incomes are expected to fall further in 2016, down 3% year on year.

Mr Parod warned that "while commodity prices have increased during the quarter, yields from the current growing season and where commodity prices settle in the fall will be more important in terms of grower sentiment and incentive for capital investment".

Stronger international sales

Irrigation sales in international markets showed a more positive trend.

International sales were up 4% year on year, even after accounting for a 4% negative currency impact due to the stronger dollar.

"Sales were improved in several markets while Brazil and certain export markets experienced declines," Lindsay said.

But the company still warned that irrigation projects could be delayed by low commodity prices, while political instability still threatened Middle Eastern and Former Soviet Union markets.


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