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Lindsay warns that farmer spending will continue to fall

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Lindsay Corporation, the agricultural irrigation equipment supplier, reported sharply lower revenues and profits, indicating continued pressure on farmer spending power.

The company is moving to cut costs, as it sees the agricultural downturn extending, with farm budgets remaining squeezed.

For the three months to November 30, Lindsay reported revenues of $110.4m, down 9.2% year-on-year.

This was well behind analyst expectations of around $119m.

Lindsay earning were just $900,000, down from $6.9m a year ago, or $0.08 a share, well behind the $0.61 a share analysts were expecting.

Falling revenues, profits

Revenues from the company's irrigation segment fell by 11% year on year.

US irrigation revenues were down 15% thanks primarily to lower sales volumes, due to "falling commodity prices and reduced farm income" hitting demand.

The company's international segment saw sales down 6%, despite improved revenues from Brazil, Africa, and the Middle East.

Tight farm budgets cutting spending

Rick Parod, Lindsay's president and chief executive officer, blamed the lower sales on squeezed farmer incomes.

"The prolonged recession in agricultural markets is weighing on farmer sentiment toward capital goods purchases," said.

"We believe farmers are taking a wait and see approach and deferring purchases in the current environment."

Continued downturn

And the situation doesn't look likely to improve any time soon, Mr Parod said.

"As the agricultural down cycle extends, weakness in demand for irrigation equipment is expected to continue," he warned.

Mr Parod said the company would move to reduce expenses, in response to the expectation of continued weak demand.

By William Clarke

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