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Russian tractor sales halve, amid 'challenging conditions'

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Ekotechnika - while unveiling results which sent its shares soaring - acknowledged "challenging conditions" in the Russian farm machinery market, even as industry data showed a slump in industry tractor sales.

"The framework conditions for the agricultural machinery business in Russia remain challenging," said Stefan Durr, the Ekotechnika chief executive, as farm equipment retailer flagged a "tight" political and economic situation in the country.

"Geopolitical factors such as the unresolved Ukraine crisis and the sanctions as well as economic factors such as the low oil price and the high interest rates in Russia continue to have a strong impact on the entire industry," the group said.

The comments came hours after data from Rosagromasch, the Russian farm machinery industry group, revealed that domestic sales of combines tumbled by 42% to 1,544 vehicles last month.

Overall sales in the first two months of 2016 were, at 2,365 units, down 54% year on year.

'Reason for optimism'

However, the data appeared to offer some consolation for Ekotechnika, after a period when the group's status as the top seller of international equipment brands, such as John Deere, in Russia has left the company particularly exposed to the knock-on effects of worsened foreign relations and a weakened rouble.

Sales of four wheel drive tractors, purchased by larger farm operators which tend to have a greater preference for foreign brands, rose by 68% to 248 vehicles in the first two months of the year, according to Rosagromasch.

Industry combine sales, at 552 units, were up by 90% in Russia.

Mr Durr said that "developments of the past months give reason for optimism", although this was also a reference to success in a prolonged debt-for-equity swap which saw Ekotechnika shares listed in Dusseldorf in February.

Loss narrows

Ekotechnika unveiled a 20% rise to E22.9m in sales for the October-to-December period, the first quarter of its financial year, with the group flagging a "considerable recovery in sales of agricultural machinery", besides continued strength in its parts business.

Parts divisions at farm equipment groups often flourish in time of hardship for the core retail operations, as farmers forego machinery purchases and stick with existing stock, with greater repair requirements.

The group's pre-tax loss narrowed to E1.9m, excluding a one-time boost from its capital restructuring, compared with a loss of E18.1m a year before.

Ekotechnika shares stood 35% higher at E7.95 in late deals in Dusseldorf.


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