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'We are at or near the bottom of the cycle,' Lindsay says

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Irrigators maker Lindsay Corp, unveiling a lower-than-expected drop in earnings, called time on the downturn in at least its part of the agriculture market, but said an upswing may be some way off yet.

"It appears we are at or near the bottom of the cycle," said Rick Parod, the Lindsay Corp chief executive, signalling hopes of an end to the downswing in the group's fortunes dealt by weak crop prices and a strong dollar which have "constrained" its market.

The comments offer a more rosy outlook than provided by some other commentators on the farm equipment market, with a survey by Creighton University last week in the key US agricultural states showing a decline in a sector index to a record low.

"The strengthening US dollar and global economic weakness have pushed farm commodity prices down by 8% over the past 12 months," said Ernie Goss, the Creighton economics professor in charge of the survey.

"These weaker prices have discouraged farmers from buying additional agriculture equipment and have negatively affected the agriculture equipment dealers and manufacturers in the region."

'Remain challenging'

Indeed, Mr Parod was cautious over a recovery, saying that "we expect the market environment will remain challenging at least through 2016".

The group also flagged that US net farm income is expected by US officials to slide by 38% this year, to $55.9bn, and that unrest was affecting foreign sales.

"Political instability in the Middle East and government sanctions in the Russia/Ukraine region continue to affect these markets," Lindsay said.

Still, "strong farm balance sheets support future investments", the group added, underlining long-term dynamics such as a need to conserve water, and feed a growing and increasingly wealthy world population.

Shares soar

The comments came as Lindsay unveiled earnings down 8.2% at $6.94m for the September-to-November quarter, on revenues down 9.8% at $121.6m.

The decline was led by the group's larger irrigators division, which saw operating profits drop 14% to $12.7m on revenues down 11.7% at $101.3m, with results at the smaller infrastructure business showing some improvement.

Group earnings per share held flat at $0.62, and came in well ahead of market expectations of $0.55 per share, a result well received by investors.

Lindsay shares stood 10.1% higher at $75.39 in early deals in New York.


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