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Titan 'confident' on prospects despite weak start for ag sales

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Titan Machinery flagged its "confidence" in its long-term prospects, and stood by expectations for full-year earnings, amid "low demand" for farm machinery, despite a slower-than-expected start to the year for farm machinery sales.

The seller of Case and New Holland equipment unveiled a loss of $6.20m for the February-to-April quarter, although that was narrower than the $6.49m loss a year before, and a slightly better result than investors had expected.

Adjusted losses per share stood at $0.13, compared with a market forecast for a loss of $0.22 per share.

The loss reflected the dent to farm spending from low crop prices, which sent Titan Machinery's revenues down 24% to $353.2m.

Like-for-like in the core US agriculture division fell by 29%.

"Headwinds"

"Ongoing headwinds in the agriculture industry continue to impact our results," said David Meyer, the Titan Machinery chairman and chief executive.

Indeed, the group flagged "continued low end-user demand", and at a time when "high" supplies of machinery for sales were "pressuring used equipment prices and compressing margins".

And it noted the prospect of continued headwinds, with the US Department of Agriculture forecasting strong crop supplies and "low" prices, and seeing US net farm income tumble by 32% in 2015.

"Necessary steps"

Nonetheless, the group stood by its expectations for its year to January 2016, including of a drop of 20-25% in same-store in agriculture, implying some improvement in the division's performance ahead.

And Mr Meyer highlighted the measures such as the axing of one-in-seven staff, and four store closures, taken to improve performance.

"We believe that we have taken the necessary steps to navigate the challenging macroeconomic conditions by better aligning our cost structure with the current environment," he said.

"We remain confident that we are on the right track to improve our long-term financial performance and capitalise on future growth opportunities."

By Agrimoney.com

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