AGCO Sees Sales

Rebound In South America

AGCO Corp. said the company’s farm equipment sales in South America have recovered in the last few months, after a steep drop earlier this year, caused mainly by a credit crunch and falling commodity prices, Reuters reports. The Brazilian unit of the company, which sells equipment under the Massey Ferguson and Valtra brand names globally, saw its net sales drop by 26% in the region during the first half of 2009 from a year earlier, the biggest regional decline for the period.

In Argentina, the second biggest market in the region, sales of tractors and combines have fallen 65% and nearly 80% due to drought and governmental restrictions. Regional exports of the company’s Brazilian plants were worsened by the appreciation of the Brazilian currency against the dollar as well. Also in Brazil, Latin America’s top market for farm equipment, sales of tractors were down nearly 8% this year through September from a year earlier, in number of units. Combine sales were down 35% in the same period.

In order to stimulate business in Brazil, AGCO has developed a cane harvester that should hit the market in the first half of 2011 the company said. Brazil is the world’s largest cane producer and is gradually replacing manual harvesting with mechanized.

Company sales in Europe, Africa and the Middle East fell 6% in the first half of 2009 from a year earlier, while in North America, sales rose 5% in the period. Despite improved sales in the past two months, the company said global turnover could be 20% to 25% lower than in 2008. Net sales last year totaled a record $8.4 billion with South America accounting for nearly 20%.

AGCO cut its work force by about 20% earlier this year to around 13,000 employees in 140 countries, but it has now started to hire again.