AGCO Releases 1st Quarter Results: Net Sales Down 13.3%

AGCO, Duluth, GA, reported net sales of approximately $1.3 billion for the first quarter of 2010, a decrease of approximately 13.3% when compared to net sales of approximately $1.5 billion for the first quarter of 2009.

The company’s South American region reported a sales increase of approximately 67.7% in the first quarter of 2010, compared to the first quarter of 2009. Stronger industry demand in Brazil and Argentina produced most of the increase. The Europe/Africa/Middle East region reported a sales decline of approximately 36.5% in the first quarter of 2010, compared to the first quarter of 2009, excluding favorable currency translation impacts. The sales declines were due to constrained production and weaker industry demand in all of the major markets across Europe.

In the North American region, sales in the first quarter of 2010 declined approximately 30.5% compared to the first quarter of 2009. Working capital initiatives to manage dealer inventory levels and lower sales of utility tractors and hay products produced the decline.

Sales declines, reduced gross margins and increased engineering expenses contributed to lower income from operations for the first quarter of 2010, compared to the first quarter of 2009. Production cuts associated with inventory reduction efforts and a weaker product mix, partially offset by lower material costs, produced lower gross margins. AGCO increased its investment in new product development in order to meet new emission standards, resulting in increased engineering expense in the first quarter of 2010 compared to the same period last year.

“Margin improvement will continue to be a major focus for AGCO in the remainder of 2010,” said Martin Richenhagen, Chairman, President and CEO. “We will closely manage the seasonal build in our inventory during the second quarter to position the company for stronger second half performance. AGCO’s focus on cash flow generation and debt reduction over the past four years greatly improved our financial condition.”