With calendar year 2015 winding down, many in the farm equipment business have written off the possibility for any significant pick up in sales for this year and are looking at the possibilities for 2016.
Considering only the percentage of dealers who expect increased revenues from new equipment sales in 2016, more independent dealers, those not carrying one of the five major brands, expect growth than expect declining revenues in the year ahead.
The Oct. 9 World Agricultural Supply Demand Estimates report from USDA produced little change when it comes to crop receipts projections. So, was it a positive or negative for ag equipment dealers and manufacturers?
Net farm income is forecast to decline for the second consecutive year, after reaching recent historic highs in 2013. NFI is expected to fall nearly $33 billion (36%) from 2014’s estimate to $58.3 billion in 2015. The 2015 forecast would be the lowest since 2010, and $29.1 billion below the 10-year average.
While net farm income or net cash income is the deciding factor in farmers’ level of investment in capital goods, like ag equipment, crop and/or cash (includes livestock) receipts have proven to be the best ongoing indicator of farmers’ income, and thus future tractor sales.
Bolstered by strong sales to the livestock segment of the industry, sales of compact and mid-range tractors were among the few bright spots for farm equipment sales in 2014. Overall, sales of tractors 40 horsepower and lower were up for all of last year by 6.8%, while those in the 40-100 horsepower range rose by 8.9% year-over-year.
Last Friday, the Assn. of Equipment Manufacturers reported that the U.S. and Canada sales of new large tractors and combines fell by 19% year-over-year, which was a step up from a 29% decline in the previous month.
Worldwide production and sales of farm machinery are expected to decline by 10% in 2015, according to the VDMA Agricultural Machinery Assn. based in Frankfurt, Germany. After reaching an all-time sales high of $116 billion in 2013, sales of ag equipment fell slightly to about $114 billion last year.
Despite a less-than rosy outlook for ag for the remainder of 2015, Deere & Co. expects to remain solidly profitable for the year. Its outlook calls for net income of $1.9 billion for fiscal 2015, up from its previous guidance of $1.8 billion. The company is projecting a continued recovery in its construction equipment business as well as “adept execution” of its operating plans.
The Assn. of Equipment Manufacturers reported yesterday that sales of mid-range (40-100 horsepower) and compact tractors (under 40 horsepower) continue to offer dealers some relief from the persistent decline of high horsepower equipment.
In this episode of On the Record, brought to you by Associated Equipment Distributors, we look at Titan Machinery’s Q4 and FY 2025 earnings, and the improvement in inventory levels over the last 2 quarters
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