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Rubicon says hurricane damage will cut earnings

Thursday 24th January 2019

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Rubicon has cut its earnings guidance, citing a deeper-than-expected impact on its ArborGen business from Hurricane Michael in the US in October.

The storm – the third-most intense hurricane to make landfall in the US – wasn’t expected to hurt earnings as only one of ArborGen’s nine orchards in the country’s south was damaged, the company said in October.

But today Rubicon chair David Knott said Michael, and other extreme weather in the US south during the December quarter, had impacted expected sales and sales mix for the March-year. Accordingly, operating earnings would be about US$6 million from the almost US$7 million indicated previously.

“These events were severe, and have affected our current sales season more than we had originally projected,” Knott said. “They have negatively impacted the ability of many of our customers to plant their current season’s seedling volume due to sustained high levels of water destroying planting acreage they had prepared.”

Rubicon shares last traded at 22.5 cents and have fallen about 4.4 percent during the past year.

South Carolina-based Arborgen is the largest global commercial seedling supplier and a leading provider of advanced genetics for the forest industry. Formed in 2000, it has operations in the US, Brazil, Australia, and New Zealand. It has been wholly-owned by Rubicon since 2017.

(BusinessDesk)

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