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Lindsay Corporation reports improved outlook for irrigation after 'constrained' quarter

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Irrigation specialist Lindsay Corporation said demand for its products had been "constrained" by ongoing trade negotiations between US and China and the wet, late spring in the US.

 

The US-based irrigators group, whose brands include Zimmatic and Growsmart, posted net earnings of $2.9m in the third quarter to the end of May, down from $10.4m in the same period last year.

 

However, the company said the outlook for sales of its systems for irrigation and infrastructure showed "signs of improvement" in spite of the pressure during the quarter and is continuing with a restructuring to lift operating profit margins.

 

Tim Hassinger, Lindsay Corporation’s president and chief executive, said: "Low commodity prices and uncertainty regarding the outcome of trade negotiations continued to weigh on farmer sentiment and demand for irrigation equipment during the quarter."

 

Challenging year over year comparison

 

He said that, and strong sales of the firm’s Road Zipper moveable barrier system last year resulted in a "challenging year over year comparison."

 

Overall, the firm posted top line revenues of $121.1m for the third quarter, 29% down on the same period last year.

 

About 60% of this fall was due to a decline within irrigation division, where sales dropped by $29.8m to $98.6m.

 

But irrigation revenues in North American were up by 5% to $63.0m after stripping out the impact of divested operations as part of its Foundation for Growth initiative to simplify the business and increase operating margins by to up to 12% by 2020.

 

Looking ahead, the company said there was an ’improved outlook’ for irrigation equipment, although the short-term outlook for international markets was "mixed".

 

’Improved outlook’

 

Mr Hassinger said: "Severe wet weather and widespread flooding in the US have caused delayed corn plantings and curtailed acreage, reducing supply estimates and driving a recent increase in corn prices.

 

"Any further reduction in supply and increase in corn prices supports and an improved outlook for irrigation equipment demand."

 

Shares in the business were lifted on the New York Stock Exchange and were trading up 3.0% at $81.95.

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