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Titan Machinery predicts 75% business dropoff in Ukraine, reports record earnings

Ukraine farmers are preparing for and beginning spring planting in areas less impacted by the Russian invasion, however spring farm activity is much lower than normal. Titan Machinery, based in West Fargo, North Dakota, reported record earnings and dividends on March 24, 2022.

Titan Machinery
Titan Machinery is headquartered in West Fargo, N.D., since December 2010.
Agweek file photo
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WEST FARGO, N.D. — Titan Machinery has been able to partially open some of its retail locations in the Ukraine since the Russian invasion began a month ago, but it is forecasting its business there to be down by 75%.

“We are still making efforts to help our customers and, where possible, keep our doors open,” Mark Kalvoda, Titan’s chief financial officer, said Thursday, March 23.

Kalvoda said farmers in Ukraine, a major agricultural producer, are preparing for and beginning spring planting in less impacted areas, however spring farm activity is much lower than normal.

Kalvoda made his comments during a call with investors to go over results from the fourth quarter of 2021 and overall 2021 results. West Fargo-based Titan reported record earnings and dividends.

The company said it has total assets of $39 million in Ukraine and categorized $28 million of those assets as being at higher risk because of the war in Ukraine. Most of those assets are in northern and western Ukraine and consist primarily of vehicles.

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Titan has 10 full service locations with equipment sales, parts and service and six locations with parts and service only. Titan has about 190 employees in Ukraine, almost all of whom would be natives of Ukraine. Titan said it would continue to pay its Ukraine employees despite the business disruption.

Titan says the market accounts for less than 5% of its revenues and assets and less than 25% of its international division. Because of the war, Titan forecast a reduction in revenue of approximately 75% from its Ukraine subsidiary in fiscal year 2023 compared to fiscal 2022.

News out of Ukraine has helped push wheat prices to over $10 per bushel.

Titan is still expecting growth in its international sector, in part because of those strong wheat prices benefiting farmers in other areas of Europe, such as Bulgaria and Romania.

“Please keep our Ukrainian employees and customers in your thoughts and prayers during this very difficult time,” said Bryan Knutson, Titan’s chief operating officer.

In other news from Thursday’s call with investors:

  • Titan is acquiring two machinery dealerships in southeast South Dakota. Mark's Machinery Inc has full-line Case IH dealerships in Wagner and Yankton. In 2021, Mark's Machinery generated revenue of about $34 million. The cash sale is expected to close in early April 2022.
  • Titan pegged gross profit at $332.7 million in fiscal year 2022, a 27.3% increase from the previous year. 

David Meyer, Titan Machinery CEO, said the company is in negotiations with other dealer groups.
"I expect acquisitions to be part of our growth story in the years ahead,” Meyer said.

Reach Jeff Beach at jbeach@agweek.com or call 701-451-5651 (work) or 859-420-1177.
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