HIAWATHA, Kan. — AgJunction released its second quarter financial report and also additional details on the company's recent merger with Novariant Inc., producer of advance steering solutions in precision ag.
For the six months ended June 30, 2015, the AgJunction reported revenue of $7.7 million, a 25% decrease from $10.3 million in the second quarter of 2014. Lower revenue for the quarter is related to ongoing softness in the aftermarket agricultural retail space, and lower food commodity prices, causing farmers to delay investment and purchasing decisions.
These conditions drove the drop in the Air ($1.1M) and Outback ($1.0M) business units. The Agronomy Services business, which had sales of $0.6M in Q2 of 2014, was sold April 1 2015, so it did not generate any Q2 2015 sales. United States and Canadian combined revenues were down by 51% from the second quarter of 2014, driven largely by the company’s Air product line which was down by 51% year-over-year in the US.
In the U.S., net farm income has been declining since 2013, and according to the February 2015 U.S. Department of Agriculture (USDA) report, a further decline of 32% is forecasted for 2015. Lower crop and livestock receipts are the main drivers of the 2015 decrease in net farm income.
The rate of growth in U.S. farm assets is also forecasted to slow in 2015 compared to recent years as a result of lower net income, leading to less capital investment and a slight decline in farmland values
“In considering how long this down cycle may last, we watch new and used inventory at the dealer level charted through time,” said Rick Heiniger, President and CEO. “Factory output is lower now so the correction is underway. Dealer inventories, while still high, have been slowly declining since April, 2014. I believe
normality will be achieved on a gradual basis.”
For more detail on AgJunction's second quarter fiscal report, visit corp.agjunction.com.