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Lindsay profits beat forecasts, sending shares soaring

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drop in earnings, although the group remained downbeat on the prospects of an agriculture market recovery.

The US-based group said that it faced headwinds with both domestic sales, which "continues to be impacted by lower commodity prices and farm incomes", and abroad where "markets have also been affected by changing currency rates and global commodity price reductions".

Operating profits in irrigation fell by 29% to $19.9m for the March-to-May quarter, on revenues down 12% at $131.3m.

And the group held out little hope of recovery for now.

"While the longer term drivers to our markets remain positive, we do not see any significant indicators of near term improvements from the current cyclical downturn in agriculture," said Rick Parod, the Lindsay chief executive.

"We will continue to seek opportunities to improve our cost structure," he added, the day after seeds giant Monsanto unveiled plans for cost cuts, also foreseeing an extension of the agriculture market downturn.

Road to growth

Nonetheless, Lindsay shares touched $91.93 at one point, up 11.3% on the day, before easing to $90.70 in afternoon deals in New York, up 9.8% on the day.

The group's overall earnings, while down 22% at $12.9m on revenues down 5.4% at $160.7m, did not fall as far as investors had expected.

Earnings per share came in at $1.10, well above the $0.80-per-share result that Wall Street had forecast.

Lindsay's smaller road infrastructure division achieved a seven-fold rose in operating profits in the latest quarter to $19.9m, on revenues up 19.1% at $24.9m.

"The infrastructure segment once again delivered very positive results in the quarter, reflecting increased market penetration and share gains," Mr Parod said.

'Political instability, sanctions'

The growth in infrastructure was led by road safety products, which achieved a 51% jump in sales.

In irrigation, the domestic division saw sales slip by a modest 2%, although that included a boost from the acquisition of Elecsys.

Foreign sales dropped by 27%, with Lindsay noting that "political instability in the Middle East and government sanctions in the Russia/Ukraine region continue to affect these markets".

Lower commodity prices could mean "large irrigation project delays", the group added.

By Agrimoney.com

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