AGCO Focuses On Brazil

Tractors and combines sales will keep rising in the coming years despite a credit crunch resulting from the global financial crisis, said Martin Richenhagen, AGCO’s chairman and chief executive, Reuters reported. This is largely due to the global agriculture fundamentals remaining as strong as they were some months ago, and for the company specifically in Brazil, before the deepening of the financial turmoil, he said.

In Brazil, the company said they expect tractor sales at record levels this year and again in 2009 as farm income increases, helped by a reduction in fertilizer and other agrochemical costs due to falling oil prices. Richenhagen said AGCO is in a strong position to face the turmoil as it has enough cash, its debt-to-capital ratio “is down to zero” and it has financially “powerful” partners to finance future demand among AGCO’s clients.

The U.S.-based company, which sells equipment under the Massey Ferguson and Valtra brand names and has a global presence, expects sales to reach $9 billion in 2008, up from $6.8 billion last year. South America accounts for about 20% of their sales. Brazil is seen as a strategic market for AGCO mainly because its potential in biofuels and favorable weather conditions which allow farmers to harvest several times a year, Richenhagen said. They hold about half of the nation’s tractor market. ❖