Cervus Equipment (TSX:CERV) reported larger than expected drops in revenue and profit on slower sales – including from its Canadian Peterbilt dealerships – in its second-quarter financial results.
Cervus earned C$2.19 million, or C$0.18 per share, on C$327.6 million in revenue (the Canadian dollar equals US$0.76). Analysts expected C$0.51 per share on revenue of C$406.51, according to Yahoo Finance.
Revenue dropped by 20 percent compared to the second quarter of 2018. Adjusted income declined by 84 percent.
A 30 percent decline in sales of agricultural products led the weakness. Revenue from Cervus’ transportation segment, largely from its network of Canadian Peterbilt truck dealerships, dropped by 8 percent to C$105.94 million
“Our Western Canadian Agriculture operations are facing compounding headwinds that have highlighted opportunities to improve our profitability across market cycles,” CEO Angela Lekatsas said in a statement.
Cervus blamed the transportation weakness on a “tapering” of truck sales on a weaker freight market compared to strong demand in 2018.
A drop in truck sales weighed on its first-quarter loss reported in May. The company said it expected sales to recover as it processes a backlog of orders.
Cervus executives will discuss the results with analysts tomorrow, August 9. Lekatsas transitioned to her role as CEO during the quarter, succeeding Graham Drake.