In many ways Buhler Industries Inc. is a growing company.
But that wasn’t reflected in sales, profits or share prices in 2010.
The company hopes that will change in 2011 if overseas equipment markets recover from recession, crop production problems in Canada and overseas don’t recur and confidence returns to buyers.
“We’re still seeing it very soft,” Buhler chief financial officer Willy Janzen said about demand in Russia, Kazakhstan and Ukraine, which are major markets for the Winnipeg based equipment manufacturer.
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However, the company hopes fewer crop problems and good prices in Canada and the United States will boost sales in the domestic market, according to marketing executive Adam Reid.
“With crop prices the way they are, we have more opportunity for new equipment sales,” Reid said an hour after he returned from the annual Versatile dealers show in Las Vegas.
“We still think it will trend higher, at least for the first six, seven months of the year.”
While Reid described Buhler’s results for October, November and December as solid, its Sept. 30 year end looks as weak as its share price has been for two years.
Revenues slumped 26 percent and net profits fell by more than 40 percent from 2009.
Results from 2009 included money from sales made in the booming 2008 commodity price boom.
In 2010, Buhler had its worst operating profits since 2007 and its profits have not risen out of a range first roughly established in 2001 and 2002.
Its share price has hovered well beneath its 2007 peak of $7.25 in the 2010 financial year, holding to a range of $5.15 to $6.
Total assets and working capital are the company’s main areas of substantial growth and a reflection of growing inventories as the company keeps its factories running despite the sales slowdown.
Hopes for 2011 include a return of sales of its key line of Versatile tractors and Farm King implements to Russia, Kazakhstan and Ukraine, increased sales of its main products in Canada and the U.S., and sales of new types of products, including grain bins from Westeel and augers, hoppers and grain cleaners from a South Dakota company Buhler started operating in early 2010.
Sales to Russia, Kazakhstan and Ukraine were hammered by the worldwide financial crisis of 2008-09 and the ravages of the widespread drought.
“The economic collapse . . . set our expectations substantially lower,” Reid said. “When the economy crashed, they pretty much stopped buying equipment.”
In Western Canada, a terrible spring in many areas, poor summer conditions and bad harvesting weather softened sales too, Reid said.
Expectations for wet soils this spring are also making farmers cautious.
“Western Canada is going to continue to be a challenge,” said Reid.
The company is hoping to develop new markets for its equipment in Asia and Africa with the assistance of Export Development Canada. It is already talking to buyers in both continents and has made small sales.
Reid said the company is finding the right equipment for the right buyers, plus ensuring financing is available.
“The areas of Asia and Africa we are talking to are somewhat reminiscent of the early days when we started dealing with Russia in the early 2000s,” said Reid.
Buhler’s problems with sales to the credit-deprived former Soviet Union and production-plagued Western Canada make its financial results weaker than those of other farm equipment manufacturers.
Last year, Fiat’s Case-New Holland division and Caterpillar Inc. reported higher than expected earnings based on good sales.
Caterpillar, which produces mostly construction equipment as well as farm equipment, was the Dow Jones Industrial Average’s biggest share price gainer of 2010, rising 65 percent during the year.
And some overseas markets also have booming farm equipment markets, including Brazil, where Buhler does not have a big presence.
According to Bloomberg, Brazilian farmers borrowed 64 percent more to buy farm equipment in the months before seeding this year’s crop than they did the previous year.
