A slowdown in demand for its Versatile tractors overseas has shrunk third-quarter profits for Winnipeg farm equipment maker Buhler Industries.
The company on Friday posted net earnings of $1.2 million on $76.7 million in revenue for its Q3 ending June 30, down from $4.4 million on $62.9 million in the year-earlier period. Its year-to-date profits are up at $10.3 million.
About half of the company’s increased Q3 sales came from overseas sales to Buhler’s majority owner, Russian combine manufacturer Rostselmash. Sales of Buhler’s short-line equipment and farm tools also rose 10 per cent in this Q3.
Higher sales and more manufacturing activity have Buhler seeking “additional working capital,” mainly in inventory and receivables, the company said Friday.
Inventory, for instance, rose to $104.8 million from $81.0 million due to the increase in sales but due also to the recent decline in overseas tractor demand.
Buhler “is currently in discussion to secure additional financing to support its growth,” the company said.
“Sales to date of $227.1 million are just shy of our record year of $232.6 million recorded in 2002 despite the current global economic crisis,” the company said.
Overseas sales in Eastern Europe and Russia are lagging on reduced demand for its Versatile tractors as sales experience “significant credit issues,” the company said.
Buhler expects a drop in inventory in its fourth quarter as it cuts its production schedule, which it said had been adjusted several months earlier “specifically for overseas tractors.”
The strong Canadian dollar is also working to tighten the company’s margins, but Buhler noted that tightening is “partially offset by lower material costs.”