Raven Industries Partners CNH Industrial to Assist Growers
Raven Industries Inc. RAVN signed a new long-term agreement with CNH Industrial N.V. CNHI. The deal will help in expanding the use of Raven’s products and technology through the global dealer network for CNH Industrial brands Case IH and New Holland Agriculture.
Raven delivers high quality, innovative products, assisting growers and custom applicators globally. The contract will empower Raven and CNH Industrial to help customers increase efficiency, decrease input costs and deliver higher yields.
With a growing world population and income growth in emerging economies, greater demand for food will support development. Raven continues to invest in growth internationally for the long term. Further, emerging agriculture markets provide opportunities for Raven's precision agriculture products to meet market needs.
However, softness in the agriculture market put pressure on Raven’s Applied Technology segment throughout fiscal 2015. With contraction of end-market, several OEMs are reducing production levels. Also, given historically high corn inventories, cyclically high input costs, and waning grower sentiment, demand remains subdued for precision agricultural equipment and is not expected to recover until late in fiscal 2016 at best.
Nevertheless, Raven is confident of the North American agricultural market in the long term. In the first quarter, Raven implemented a $13 million restructuring plan to further lower its cost structure. The cost reductions covered all divisions and included the corporate offices but were heavily weighted to Applied Technology.
The company’s efforts to transform its business by investing in essential strategic initiatives along with the reduction of operating expenses will likely enhance its performance. The company will optimize internal investments in each of the three operating divisions and invest in projects with the greatest long-term growth potential.
However, challenges from the commodity cycles also remain a matter of concern for Raven. Moreover, foreign exchange volatility, increased competition and changes in trade, monetary and fiscal policies, along with laws and regulations will affect Raven’s results.
Raven currently carries a Zacks Rank #3 (Hold). A couple of better-ranked diversified-operations stocks are John Bean Technologies Corporation JBT and Federal Signal Corp. FSS. Both the stocks carry a Zacks Rank #2 (Buy).
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