AGCO Reports 1st Qtr. Results

AGCO, Duluth, GA, reported net sales of $1.8 billion for the first quarter of 2011, an increase of 35.3%, compared to net sales of $1.3 billion for the first quarter of 2010. Reported and adjusted net income per share were $0.81 for the first quarter of 2011. Excluding favorable currency translation impacts of 3.3%, net sales in the first quarter of 2011 increased 32.1% compared to the same period in 2010.

“Robust farm economics are stimulating markets in Western Europe and sustaining market strength in North and South America,” said Martin Richenhagen, Chairman, President and Chief Executive Officer. “AGCO capitalized on strong industry demand and delivered record first quarter sales and earnings. We demonstrated operational execution by raising production significantly, growing sales over 30%, and expanding margins. Margin expansion in the first quarter was led by the Europe/Africa/Middle East (EAME) and North American regions. EAME operating margins rebounded to nearly 9% driven by the strong European market recovery and North American operating margins improved 600 basis points over a year ago.”

In the North American region, sales in the first quarter of 2011 improved 25.4% compared to the first quarter of 2010, excluding favorable currency translation impacts. Strong growth in tractors and combines highlighted the results. AGCO’s South American region reported a sales increase of 1.4% in the first quarter of 2011 compared to the first quarter of 2010, excluding favorable currency translation impacts. Stronger industry demand in Argentina and other South American markets offset sales declines in Brazil.

Richenhagen said, “Deere is slashing its prices on farm tractors in South America as part of a strategy to chip away at Agco Corp.’s leading market share in the region.” Richenhagen said he’s reluctant to engage in a price war with Deere, but added that AGCO is determined to maintain its South American market share and would resort to retaliatory price cuts if Deere’s discounting persists in South America.

A Deere spokesman said the company does not comment on its prices in specific markets. ◆