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On The Record: May 16, 2014

Biggest Dealers are Getting Bigger

In today’s newscast we look into the results of the latest “Big Dealer Report,” the latest financial reports from CNH and Deere as well as dealer groups Rocky Mountain Dealerships and Cervus Equipment, and technology editor Jack Zemlicka provides an update from PlugFest.

Click here for complete transcript (below).

On The Record is brought to you by GBGI Inc.

GBGI Inc. has been developing hubs and spindles for the agricultural industry since 1997. Their product range includes IDA-X, the hub assembly with a robust design and ductile iron construction that substantially increases the load capacity and impact resistance compared to conventional fabricated welded assemblies.

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Please leave comments about today's episode in comments section below. You can also send feedback or story suggestions to kschmidt@lesspub.com and cvandermause@lesspub.com.


Biggest Dealers are Getting Bigger

Hi I’m Kim Schmidt, managing editor. Welcome to On the Record. Here’s a look at what’s impacting the ag equipment industry right now. 

Biggest Dealers are Getting Bigger

Ag Equipment Intelligence released its annual Big Dealer Report at the end of the April. The report reveals that consolidation of North American farm equipment dealerships continued at a healthy pace over the last year.

The total number of dealers operating 15 or more stores grew from 20 to 24 in the last year. These 24 dealer groups, on average, have 31.3 total locations and 23.2 ag stores.

The report indicates the number of retail stores handling ag machinery dropped slightly in the last year to 6,900 from 7,000. 

The total number of dealers that operate 5 or more stores once again declined, bringing the total to 181 in 2014 vs. 184 last year.

CNH & Deere Report Quarterly Results

CNH reported its first quarter results on May 8. Total revenues for the quarter came in at $7.5 billion, down 0.1% vs. the first quarter of 2013.

Net sales of farm equipment fell 6% vs. the first quarter of last year to $3.7 billion through the first three months of the year. 

First quarter results are in line with CNH’s outlook for total annual revenues to be flat to up 5% in 2014.

John Deere reported its second quarter results on May 14. Worldwide net sales and revenues decreased 9%, to $9.9 billion for the second quarter and were down 4%, to $17.6 billion, for six months.

Farm equipment net sales in the U.S. and Canada decreased 12% for the quarter vs. a year ago and are down 7% for the first 6 months of Deere’s fiscal year.   

The company lowered its Ag & Turf outlook for the full fiscal year to down 7% worldwide and down 5-10% for North America.

Precision Equipment Compatibility

Precision Farming Dealer technology editor Jack Zemlicka attended the Agricultural Industry Electronics Foundation’s bi-annual PlugFest in Lincoln, Neb., May 5-7, where ag engineers from more than 50 different companies converged to conduct compatibility tests of different precision components.

Compatibility of precision farming technology across different brands continues to be a challenge for equipment manufacturers, dealers and farmers.

Farmers and dealers are pushing manufacturers to be more collaborative in their approach to improving functionality of precision equipment, especially when it comes to making multiple displays communicate with each other in a tractor cab to seamlessly manage mapping, auto-steer and GPS capabilities.

But attendees at the event admitted the rapid evolution of precision technology presents ongoing obstacles to reaching the goal of true plug-and-play compatibility.

I spoke with Ryan Pilot, engineering manager with Agtron Enterprises about the challenges the industry still faces.

It seems like the biggest challenge is that it's still progressing and people are still getting to stable units. Changes are still happening which means that the standard has to be updated regularly which means there are still updates. It's always a challenge to get all the new stuff working every year and that's why we are here right now so that in the end, the farmer has a good experience with ISOBUS instead of a bad one.

As companies continue to collaborate on solving equipment compatibility issues, dealers will be counted on to share with customers the progress that is being made, while also keeping an open line of communication with their manufacturers to discuss ongoing problems.

RME & Cervus Release 1st Quarter Results

Canadian dealer groups Rocky Mountain Dealerships and Cervus Equipment recently released their first quarter earnings report on May 6 and May 8, respectfully.

While new equipment sales were up 7.4% for Rocky, total revenues declined by 4% to $198.2 million.

The dealer group continues to focus on reducing equipment inventories. CEO Matt Campbell says, “Through a combination of rationalizing new equipment purchases and sales initiatives aimed at moving equipment, we have reduced our overall inventory level by $46.9 million since this time last year.”

Cervus Equipment reported a 17.8% gain in first quarter revenues. Both new and used equipment sales saw gains for a 14.8% year-over-year increase for equipment revenues.

Looking ahead, CEO Graham Drake says, “In Canada, the recent rail capacity issues are resolving and we are seeing an improvement in farmer sentiment as farmers realize 2013 income. When combined with current period growth and favorable economic indicators for our construction, industrial and transportation segments, we see positive conditions heading into the spring and summer months.” 

Dealer Optimism On the Rise

The latest Dealer Sentiments & Business Conditions Update released by Ag Equipment Intelligence April 30, indicates dealers had a more optimistic outlook for the first time since July 2013. 

A net 3% of dealers reported a more optimistic outlook for the year vs. a net 1% who reported they were less optimistic in the previous month’s survey.

Optimism hit its lowest point in December 2013 with a net 30% of dealers reporting they were less optimistic.

And now from the Ag Equipment Archives…

In 1962 in order to increase capacity of its engines, Allis-Chalmers introduces the Model D19, the world’s first mass-produced tractor with a turbo-charged diesel engine.

The 4.3 liter engine increased power by 10%.

It was a technological victory for Allis-Chalmers and today most diesel engines are turbocharged to provide more power and reduce carbon dioxide emissions. 

As always we welcome your feedback. You can send comments to kschmidt@lesspub.com.

Thanks for watching. I’ll see you next time. 

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