AGCO Reports Second Quarter Results
AGCO has reported results for the second quarter ended June 30, 2022. Net sales for the second quarter were approximately $2.9 billion, an increase of approximately 2.3% compared to the second quarter of 2021. Excluding unfavorable currency translation impacts of approximately 7.5%, net sales in the second quarter of 2022 increased approximately 9.8% compared to the second quarter of 2021.
“AGCO delivered solid results in the second quarter by remaining focused on our farmer-first strategy, while effectively managing the challenges associated with the cyberattack, currency headwinds and ongoing supply chain constraints,” stated Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer. “Our results reflect substantial price increases to combat rising material costs, higher logistics expenses, and other manufacturing inefficiencies. Farm fundamentals remain favorable and are supporting healthy order boards that remain ahead of last year’s level. Our farmer-first approach and expanding precision ag portfolio are contributing to strong end-market demand and robust growth in our margin-rich businesses.”
“Healthy grain production is forecasted for the major agricultural production regions. Although crop prices have declined from record levels earlier in 2022, they remain supportive and are helping farmers offset inflationary pressures from higher fuel, fertilizer and other input costs. Farm income estimates remain elevated and are expected to extend the strong end-market demand,” stated Mr. Hansotia.
“While dependent on supply chain performance, we continue to expect strong demand in the second half to support full year 2022 industry retail sales that are expected to be above 2021 levels in North and South America and approximately flat in Western Europe,” continued Mr. Hansotia.
Regional Results
North America – AGCO’s North American net sales grew 7.6% in the first six months of 2022 compared to the same period of 2021, excluding the negative impact of currency translation. The increase resulted from the effects of pricing to mitigate inflationary cost pressures, along with increased sales of tractors. Income from operations for the first six months of 2022 decreased approximately $73.1 million compared to the same period in 2021. First half 2022 operating income was negatively impacted by a weaker sales mix, material and logistics cost inflation, higher production costs and increased operating expenses, including the effects of the recent cyberattack.
South America – Net sales in the South American region increased 60.8% in the first six months of 2022 compared to the same period of 2021, excluding the impact of favorable currency translation. Sales grew strongly across all markets, driven by robust industry demand and favorable pricing impacts. Income from operations in the first six months of 2022 increased by approximately $92.3 million compared to the same period in 2021 and operating margins reached approximately 15.0%. The improved South America results reflect the benefit of higher sales and production, a favorable sales mix, and pricing that offset material cost inflation.
Europe/Middle East – Europe/Middle East net sales increased 8.5% in the first six months of 2022 compared to the same period in 2021, excluding unfavorable currency translation. The improvement was driven by higher sales of tractors and replacement parts along with favorable pricing actions. Sales growth in France and Scandinavia was partially offset by significantly lower sales in Russia and the Ukraine. Income from operations decreased approximately $22.3 million in the first six months of 2022, compared to the same period in 2021. The decline was the result of foreign currency translation, weaker sales mix, higher production costs as well as increased operating expenses, which were magnified by the recent cyberattack.
Asia/Pacific/Africa – Net sales in Asia/Pacific/Africa increased 9.0%, excluding the negative impact of currency translation, in the first six months of 2022 compared to the same period in 2021. Higher sales in Australia, Japan and Africa were partially offset by lower sales in China. Income from operations improved by approximately $17.1 million in the first six months of 2022 and operating margins expanded by approximately 3.5% compared to the same period in 2021 due to higher sales and a richer sales mix.