Rocky Mountain Equipment withdrew its plan to increase revenues to $1.5 billion
By Diego Flammini
Canada’s standing in ag trade disputes is the reason behind a company decision to scrap a growth plan, an ag equipment dealer said.
Rocky Mountain Equipment (RME) intended to increase its revenues to at least $1.5 billion by 2023. But the company has put that goal on the backburner because of ongoing diplomatic issues in China, India and Saudi Arabia.
“While some industry fundamentals remain solid, unfortunately, political and macroeconomic issues continue to create significant uncertainty for Canadian farmers and our business,” Garrett Ganden, president and CEO of RME, said in the company’s second quarter results on July 31. “The inability of the Canadian government to make meaningful progress toward improving international trade relations with several key partners only exacerbates this uncertainty.”
RME reported net earnings of only $750,000 in the three-month period ending June 30. That figure is down significantly from 2018 when net earnings for the same time totaled $6.06 million.
The company also reported a 35.7 per cent decrease in sales.
Given ongoing trade uncertainty, farmers are reluctant to invest in newer equipment, Ganden said.
“We need to get some clarity around those macro (economic) conditions … the farmers want to have some understanding of where their end markets are going to be,” he said during a conference call about RME’s earnings, CBC reported.
Sales of some Canadian ag equipment appears to be down across the board.
Sales of 4WD tractors and combines are down by 34.8 and 18.7 per cent respectively, the Association of Equipment Manufacturers said in its June 2019 Ag Tractor and Combine Report.