Analysis Corona
How do agro-concerns do on the stock exchange in times of crisis?
Share prices worldwide have plummeted due to the corona crisis. Although the blind stock market panic is now over, the old levels are still a long way off. How did the agri-powers emerge from the crash?
John Deere retracts forecasts
We start with John Deere, for which it remains to be seen to what extent sales fall. As a precaution, the American tractor giant decided to withdraw its profit forecast for this year. Despite the trade war, Deere performed reasonably well on the stock market last year, but this year analysts are looking bleak. The American investment bank Jefferies Group has revised its forecast earnings per share (indication for dividend) for 2020 from $10 to $6.
ForFarmers postpones strategy
ForFarmers, one of the few listed agricultural companies in the Netherlands, has been underperforming on the stock exchange for some time now. The share had already slumped before the crash, because the animal feed company has been unable to refute as good figures in recent quarters. In addition, the future of livestock farming in North-West Europe is still uncertain and ForFarmers has a dominant presence here. Investors will have to be patient for a while to see how this will be responded to. The unveiling of the new strategy has been postponed until the autumn. Although the price is now picking up again, the old levels are still a long way off.
Personnel issues at Tyson Foods
Meat processors in the US are hotbeds of corona outbreaks. Tyson Foods, one of the largest meat companies, is also struggling with personnel problems. For example, a production location in Iowa was forced to close this week. In order to encourage the more than 110.000 employees, the management decided at the beginning of April that they could distribute $60 million, which comes down to a sloppy $500 per employee. During the stock market crash, the share took a lot of blows, but from mid-March there will be a recovery.
Bayer: Could it get any worse?
The German chemical group Bayer should not be missing from this overview. The stock has performed poorly in recent years, due to a series of billions of claims about RoundUp. In March, the share price fell further. The question is, can it get any worse? Opinions differ on this. However, a rapidly rising share price is not obvious. In many 'green' investment portfolios, there is no room for chemical groups.
Potato crisis hits Lamb Weston
These are difficult times for many potato processors and not least for the American company Lamb Weston, also active in the Netherlands. The stock almost halved in March. Because French fries sales have fallen sharply, the company has withdrawn its turnover forecast for this year. But besides corona, there are more problems. The third quarter of the broken 2019/20 fiscal year was worse than analysts had expected. Higher raw material costs, among other things, reduced gross profit by nearly 10% to $250 million.
Analysts positive about Kerry Group
We close the overview with the performance of the Irish Kerry Group, a large dairy company. Once founded by dairy farmers, they control a whopping 15% of Ireland's milk production. This stock also hit hard in March. Although dairy processors are facing major sales problems, analysts are not gloomy about the future. The leading position in emerging markets means strong growth prospects. In addition, Kerry has strong brands in the various consumer markets.
Wouter Job
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