Equipment dealer blames farm trade wars as plans for aggressive growth stall
Farm confidence wanes due to China's ban on Canadian canola and pork, India's tariffs on lentil imports and Saudi Arabia's decision last year to stop buying Canadian wheat and barley
CALGARY – Canada’s largest agriculture equipment dealer says it is scrapping its aggressive growth strategy in part because of farmer pessimism it blames on unsolved international trade disputes.
Rocky Mountain Dealerships Inc. cited the federal government’s inability to solve trade battles with China, India and Saudi Arabia as it reported second-quarter financial results that fell well short of analyst expectations.
It is reporting net earnings of $750,000, or four cents per share, on revenue of $195 million in the three months ended June 30, versus earnings of $6.06 million or 30 cents on revenue of $303 million in the same period of 2018.
Analysts had expected net earnings of $2.6 million, or 18 cents per share, on revenue of $269 million, according to financial markets data firm Refinitiv.
The Calgary-based company says it has decided to abandon a plan announced in May 2018 to increase annual revenues to at least $1.5 billion by 2023, due to a poor North American farm business climate and a lack of availability of attractive acquisition targets.
It says farm confidence has tumbled because of factors such as China’s ban on Canadian canola and pork, India’s increased tariffs on lentil imports and Saudi Arabia’s decision last year to stop buying Canadian wheat and barley.
“While some industry fundamentals remain solid, unfortunately, political and macroeconomic issues continue to create significant uncertainty for Canadian farmers and our business,” said CEO Garrett Ganden in a news release.
“The inability of the Canadian government to make meaningful progress toward improving international trade relations with several key partners only exacerbates this uncertainty.”