AGCO Reports First Quarter Results

AGCO reported net sales of approximately $2.4 billion for the first quarter of 2013, an increase of around 5.7% compared to net sales of $2.3 billion for the first quarter of 2012. Excluding unfavorable currency translation impacts of approximately 2.7%, net sales in the first quarter of 2013 increased approximately 8.4%, compared to the first quarter of 2012.

North American sales grew 10.3% in the first quarter of 2013 compared to 2012, excluding the impact of unfavorable currency translation. Elevated levels of farm income in 2012 continued to support industry demand in the first quarter of 2013 from the professional farming sector and produced strong growth for AGCO. The most significant increases were in high horsepower tractors, implements and combines. Higher sales and margin improvement initiatives contributed to growth in income from operations of $21.9 million for the first quarter of 2013 compared to 2012.

South American net sales improved 26.4% in the first quarter of 2013 compared to the first quarter of 2012, excluding the negative impact of currency translation. Higher sales in Brazil produced most of the increase. Brazilian farmers benefited from more favorable weather in the first quarter compared to the drought conditions that existed in early 2012. AGCO’s profitability in South America improved during the first quarter of 2013, with operating margins rising to 10.4% compared to 5.8% in the same period of 2012. Income from operations increased $24.4 million for the first quarter of 2013 compared to 2012 due to higher sales and the benefit of cost reduction initiatives.

Global industry demand is expected to be relatively flat in 2013 compared to 2012. Growth is projected in South America; North America is expected to remain stable; modest declines are anticipated for Western Europe.

Net sales are expected to range from $10.5 billion to $10.7 billion. Gross margin improvement is expected to be partially offset by increased engineering expenditures to meet Tier 4 final emission requirements and market development expenses.

“Industry fundamentals remain solid, and we have increased our 2013 sales and earnings outlook,” continued Mr. Richenhagen. “We will maintain our focus on improving profitability throughout 2013, while also increasing our investments to support our longer term objectives. These investments include construction of a low horsepower production facility in China and our important investments in new product development and market expansion. We are also forecasting another year of solid cash generation after funding our growth investments.”