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French ag 'tensions' overshadow Manitou improvement

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The "tensions" in French agriculture could undermine a recovery in farm machinery sales, Manitou said, even as it appeared to escape sales weakness reported by its larger peers.

The French-based group, which makes equipment such as telehandlers used largely by livestock farmers as well as construction and mining workers, said its sales rose by 6% to E642m in the first half of 2015.

The increase was helped by a sales in agriculture, where "business activity… showed slight growth during the half-year period", contrasting with "depressed" mining market conditions, Manitou said.

"The agriculture sector stabilised," said Michel Denis, the Manitou chief executive.

'Could slow the recovery'

However, he cautioned of a potential setback from the ag sector unrest in the group' key French market, where farmers have staged a series of protests, and erected blockades on the border with Germany, in anger at low agricultural commodity prices.

"In France, the impact of recent tensions in the agricultural sector could slow the recovery of that market," Mr Denis said.

The comments come despite some concessions by the French government to farmers, with plans announced last week to lift the prices of beef, milk and pork, and to hand farmers up to E1.1bn in tax debates, delayed payments and loan guarantees.

On Tuesday, banks agreed to go easy on farmers struggling with debt repayments, as part of a government support package including on agricultural loans.

Manitou vs CNH vs Agco

Manitou's relatively upbeat performance in agriculture overall contrasts with that of larger rival CNH Industrial, the maker of Case and New Holland Tractors, which on Wednesday unveiled a 24% drop to $3.0bn in agriculture sales for the April-to-June quarter and cut its full-year earnings outlook.

On Tuesday, Agco, the maker of Fendt and Massey Ferguson machinery, revealed a 25% drop to $2.07bn in sales, although it raised slightly its forecast for full-year earnings.

However, ag machinery market weakness is seen as particularly severe in equipment, such as combines and large tractors, used by arable farmers, which have seen a sharp drop in crop prices.

The smaller machinery used by livestock farmers has proved largely in greater demand, with beef producers showing decent profits in many countries, helped indeed by the drop in grain prices.

Manitou shares stood 0.6% lower at E18.24 in afternoon deals in Paris.

Broker CIC Securities lifted to E21 from E16.50 its target price on Manitou shares, but cut to "hold" from "buy" its rating on the stock.


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