Rocky Mountain Dealerships (RME) and Cervus Equipment (CERV), two of Canada’s largest farm equipment dealership groups, issued first quarter earnings reports in the past week showing improved sales levels.
While acknowledging that low commodity prices continue to dampen demand for new farm machinery, David Meyer, Titan Machinery’s chairman and CEO, noted that high crop yields had improved sentiment among the dealership group’s farm customer base in the third quarter.
While supply and demand imbalances continue to plague many ag machinery dealers, the three publicly held North American farm equipment dealership groups are reporting progress in reducing their equipment backlogs.
Titan Machinery, Case IH’s larger dealership group, reported on Aug. 25 that revenues for the second quarter of fiscal 2017 were down 19.3% to $285 million vs. $353 million a year ago.
In a surprise move, on March 4, analysts at RW Baird upgraded Titan Machinery shares to “outperform” from “neutral” and raised its share price target to $16 from $12.
Following a particularly difficult quarter where revenues rose only 1%, Titan Machinery, the Fargo, N.D.-based retailer of farm and construction equipment lowered its outlook for annual revenue, net income and earnings per share.
Rocky Mountain Dealerships’ posted revenue gains of 5.5% in the second quarter as the dealership group made a concerted effort to reduce its equipment inventories.
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In this episode of On the Record, brought to you by Associated Equipment Distributors, Deere Director of Investor Relations Josh Beal told JP Morgan analysts that the OEM is confident it will be “producing to demand” in fiscal year 2025.