This year's late harvest will delay but not necessarily curtail sales of Canadian-listed farm equipment manufacturers, says Robert Winslow, Wellington West analyst.
"With the North American harvest running two to four weeks behind schedule this late in the season, we believe farmer equipment purchases are being delayed, prompting us to shift some Q3 sales into Q4," said Mr. Winslow in a note to clients. "However, we believe most of these purchases are merely deferrals to Q4."
As of last week, Mr. Winslow noted that US spring wheat was 69% harvested versus a 92% five-year average, while 12% of US corn was mature versus a 37% five-year average. Meanwhile, the Saskatchewan crop is 32% harvested compared with five-year average of 47%.
The analyst shifted earnings from Q3 to Q4 for Ag Growth International, whose grain augur sales will likely be delayed, and Hemisphere GPS, who will suffer this quarter largely from weak European demand for equipment.
Cervus LP profits will also be deferred, but margins may actually benefit from increased parts sales.
"We acknowledge the possibility that the company’s business mix may shift to more higher-margin parts sales if and as farmers rush to combine their fields in a quickly shortening season," he said.
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