Buhler Industries, the manufacturer of the Versatile and Farm King line of agriculture equipment, reported its year-end earnings on Dec. 30, 2019.
Revenue for the year was $229.1 million, down $58.9 million or 25.7% from sales of $288 million in 2018. The company’s lower sales levels are as a result of trade uncertainties, bad harvest conditions and poor crop yields coupled with low commodity prices. Sales to North America and Eastern Europe are below historical levels, while other markets have remained steady.
Net Earnings up for the Year
The net loss for the year was $29.5 million, an improvement of $20 million from the loss in the prior year. In the current year, the company undertook significant cost saving measures that has resulted in the improvement to gross margin and reduction in selling and administrative spending. In 2019 the company also had large gains on sale of certain intellectual properties and other surplus assets. A significant reduction in research and development was partially offset by increased interest expenses. Furthermore, in the current year the company decided to write off $22.5 million of certain deferred tax assets in Canada. While the company believes that these assets will be realized in future periods, management has decided to not recognize these assets as at Sept. 30, 2019. These assets will be recognized in future periods when profitability returns.
Trade uncertainties and poor harvests have dampened demand for new agricultural equipment in 2019, and this is expected to roll over into 2020. In addition, lower commodity prices are still expected in the short term. Despite the circumstances, the company expects to achieve higher gross margins in the next year as the company continues to focus on margin improvement. This focus was notable as the gross margin increased by 3.3% during 2019. Sales levels are expected to increase during the year as the company begins full production of its new mid-range front-wheel assist Versatile Nemesis Series tractor with horsepower ranging from 175-250. In addition, sales of the Kubota tractor are also expected to increase during the year as a result of the long-term partnership agreement.