09.09.2013

More revenue, less profit at Titan

US based equipment distributor, Titan Machinery has reported a solid increase in revenues, combined with a drop in profits in the first half of its fiscal year.

In the six months to the end of July, total revenues were $929.9 million, almost 12 percent higher than in the same period last year. Revenue gains were made in all sectors although parts, service and rental posted higher gains than sales. Pre-tax profits for the period fell almost 74 percent to $5.6 million.

Looking at the second quarter, revenues increased 19 percent, while pre-tax profits slipped 25.3 percent to $6.6 million. The company says that it now expects revenues for the full year to come in at around $2.25 to 2.45 billion.

Chief executive David Meyer said: “In the second quarter of fiscal 2014, we generated solid sales for our Agriculture segment. Our higher margin parts and service sales performed well during the quarter, however, they were partially offset by lower than expected equipment margins. As we look toward the back half of the year for our Agriculture business, we anticipate a challenging environment given lower commodity prices combined with anticipated reduced crop production in our Agriculture footprint. We believe these factors will affect our customers’ sentiment, resulting in lower equipment revenues and pricing pressure on equipment margins.”

“Regarding our Construction segment, we continue to focus on implementing and executing on key initiatives to drive top and bottom line improvements for this segment of our business. Overall industry conditions remain challenging, but we are confident that we are on the right track to improve this segment of our business and continue to believe that it will be a key structural component of our top and bottom line growth long-term.”

“Given the challenges we are facing in both agriculture and construction industries, we are reducing our revenue, net income, and earnings per share expectations for fiscal 2014. This year we have slowed our acquisition pace and are focused on integrating our recent acquisitions into our distribution network and positioning our business to achieve better leverage going forward. We remain confident in the long-term profitable growth potential for Titan Machinery due to our proven operating model and healthy balance sheet.”