CALGARY, Alberta (Aug. 8, 2019) — Cervus Equipment Corp., a 21 store John Deere dealership group, reported that overall revenue decreased 20% in the quarter, with reduced equipment sales in its Agricultural segment comprising the majority of the decrease, while a tapering of truck sales in its Transportation sector relative to the strong sales of 2018 was a secondary factor. Overall revenues include agriculture (56%) and transportation (34%) and industrial (10%) business segments.
Equipment revenue decreased 26% across the company, comprised of a 30% decrease in its Agriculture segment and a 13% decrease in its Transportation segment. The company reports that “Agriculture producers are facing a number of market headwinds and have responded with caution, while lower Transportation equipment revenue relates to tapering of demand following the substantial sales in 2018.”
Product support revenue improved across all our operating segments, increasing 4% in the quarter. “The consistent performance and continued growth opportunities within our product support departments validate our positive outlook for this foundational component of our dealerships across industry cycles,” the company said.
For the second quarter of 2019, ag revenues fell by 25% vs. the same period in 2018. For the first half of the year, revenues from Cervus’ ag segment were down by 17%.
“In our Agriculture segment, producers are facing a number of headwinds,” the company said. “Canadian Realized Net Farm Income declined 45% in the 2018 crop year, compounded by increased input costs and reduced commodity prices, trade disputes with China and dry weather conditions in parts of our Western Canada region. Producers’ have responded with caution, evidenced by the 30% decrease in Agriculture equipment sales in the quarter and 22% in the year to date period.”