PR Newswire
DULUTH, Ga., May 2, 2024
DULUTH, Ga., May 2, 2024 /PRNewswire/ -- AGCO, (NYSE: AGCO), a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology, reported net sales of $2.9 billion for the first quarter ended March 31, 2024, a decrease of 12.1% compared to the first quarter of 2023. Reported net income was $2.25 per share for the first quarter of 2024, and adjusted net income(1) was $2.32 per share. These results compare to reported net income of $3.10 per share and adjusted net income(1) of $3.51 per share, for the first quarter of 2023. Excluding favorable foreign currency translation of 1.0%, net sales in the first quarter of 2024 decreased 13.1% compared to the first quarter of 2023.
"AGCO demonstrated strong execution of its Farmer First-strategy in the first quarter," said Eric Hansotia, AGCO's Chairman, President and Chief Executive Officer. "Our results reflect the declining global demand for the agricultural equipment industry, and as anticipated, correspondingly significant production cuts that still led to solid results. The reductions were aimed at helping reduce dealer inventories. While cost and working capital management remain a priority to mitigate market pressures, we continue to reward shareholders through dividends and investing in our three margin-rich initiatives: growing our precision ag business, globalizing a full-line of our Fendt branded products and expanding our parts and service business."
"We successfully completed the PTx Trimble joint venture ("JV") transaction in early April, which greatly enhances our retrofit and mixed-fleet precision ag business," continued Hansotia. "We also launched our new leading brand, PTx, which combines precision ag technologies from PTx Trimble and Precision Planting, the cornerstones of AGCO's tech stack. The strategic alignment of these brands will expedite AGCO's technology transformation and support the future development and distribution of next-generation ag technologies for farmers and original equipment manufacturers around the world."
First Quarter Highlights
(1) See reconciliation of non-GAAP measures in appendix. | ||
(2) As compared to first quarter 2023. ARIVA.DE Börsen-GeflüsterAnzeige Aktie im Fokus
Supertrend im Tech-Sektor identifiziert – Chancen auf Kurs-Vervielfachung Kurse
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(3) Excludes currency translation impact. |
Market Update
| | Industry Unit Retail Sales | ||
| | Tractors | | Combines |
Three Months Ended March 31, 2024 | | Change from Prior Year Period | | Change from Prior Year Period |
North America(4) | | (9) % | | (17) % |
South America(5) | | (18) % | | (40) % |
Western Europe(5) | | (8) % | | (30) % |
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(4) Excludes compact tractors. |
(5) Based on Company estimates. |
"Planting activities are under way in the northern hemisphere and healthy yields would result in increases to grain inventories," said Hansotia. "Farm income levels are expected to further moderate in 2024, aligning more closely to historical averages following three prosperous years. We continue to expect increased adoption of precision technology, but more challenging farm economics are resulting in weaker global industry demand across most equipment categories. In the first quarter of 2024, retail tractor industry demand fell by an average of 10% across the three major regions."
North American industry retail tractor sales decreased 9% during the first three months of 2024 compared to the first three months of 2023. Sales declines in smaller equipment were more significant than most of the larger equipment categories. Combine unit sales were down 17% in the first quarter. Lower projected farm income and a refreshed fleet are expected to pressure industry demand in 2024, resulting in weaker North American industry sales compared to 2023.
South American industry retail tractor sales decreased 18% during the first three months of 2024 compared to the first three months of 2023. Brazil and the smaller South American markets showed the most weakness while declines in Argentina were moderate after weak industry sales in 2023. Retail demand in Brazil was negatively affected by funding shortfalls of the government-subsidized loan program and a challenging first harvest in the Cerrado region. Following three strong years, retail demand in South America is expected to further soften in 2024 as a result of lower commodity prices and farm income.
In Western Europe, industry retail tractor sales decreased 8% during the first three months of 2024 compared to the first three months of 2023 with the weakest conditions in Italy, Finland and the United Kingdom. Farmer sentiment in the region has continued to be negatively impacted by the conflict in Ukraine and high input cost inflation. Industry demand is expected to soften in 2024 as lower income levels pressure demand from arable farmers, while healthy demand from dairy and livestock producers is expected to mitigate some of the decline.
Regional Results
AGCO Regional Net Sales (in millions)
Three Months Ended March 31, | | 2024 | | 2023 | | % change | | % change | | % change translation |
North America | | $ 729.6 | | $ 923.1 | | (21.0) % | | 0.3 % | | (21.3) % |
South America | | 303.4 | | 503.8 | | (39.8) % | | 2.3 % | | (42.1) % |
EME | | 1,729.0 | | 1,703.8 | | 1.5 % | | 1.4 % | | 0.1 % |
APA | | 166.7 | | 202.8 | | (17.8) % | | (2.3) % | | (15.5) % |
Total | | $ 2,928.7 | | $ 3,333.5 | | (12.1) % | | 1.0 % | | (13.1) % |
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(6) See Footnotes for additional disclosures. |
North America
Net sales in AGCO's North American region decreased 21.3% in the first three months of 2024 compared to the same period of 2023, excluding the impact of favorable currency translation. Softer industry sales and lower end market demand were partially offset by positive pricing. The most significant sales declines occurred in the hay equipment, mid-range tractor and combine categories. Income from operations for the first three months of 2024 decreased $59.7 million compared to the same period in 2023 and operating margins were 5.8%. The decrease resulted from lower sales and production, as well as higher selling, general, and administrative expenses ("SG&A expenses") and engineering expenses.
South America
South American net sales decreased 42.1% in the first three months of 2024 compared to the same period of 2023, excluding the impact of favorable currency translation. Softer industry sales and under-production of retail demand drove most of the decrease. Lower sales of tractors and combines accounted for most of the decline. Significant sales decreases in Brazil were slightly offset by modestly higher sales in Argentina. Income from operations in the first three months of 2024 decreased by $83.3 million compared to the same period in 2023. This decrease was primarily a result of lower sales and production volumes as well as negative pricing.
Europe/Middle East
Net sales in the Europe/Middle East region increased 0.1% in the first three months of 2024 compared to the same period in 2023, excluding the impact of favorable currency translation. Growth in Germany and France was offset by lower sales across nearly all the other European markets. Positive pricing and increased sales of high-horsepower tractors were offset by declines in the other products. Income from operations increased $43.5 million and operating margins improved 230 basis points in the first three months of 2024, compared to the same period in 2023. The improvement was driven by positive net pricing, partially offset by higher SG&A expenses and engineering expenses.
Asia/Pacific/Africa
Net sales in Asia/Pacific/Africa decreased 15.5%, excluding negative currency translation impacts, in the first three months of 2024 compared to the same period in 2023 due to weaker end market demand and lower production volumes. Lower sales in China and Australia drove most of the decline. Income from operations decreased by $10.1 million in the first three months of 2024 compared to the same period in 2023 due to lower sales volumes.
Outlook
On April 1, 2024, AGCO acquired an 85% stake in PTx Trimble, and Trimble holds a 15% stake. Going forward, the PTx Trimble JV will be consolidated into AGCO's financial statements.
AGCO's net sales for 2024, including the positive impact of PTx Trimble, are expected to be approximately $13.5 billion, reflecting lower sales volumes, adverse foreign currency translation and modest positive pricing. Adjusted operating margins are projected to be approximately 11.3%, reflecting the benefits of consolidating PTx Trimble as well as the impacts of lower sales, lower production volumes, increased cost controls and modestly lower investments in engineering and other technology efforts to support AGCO's precision agriculture and digital initiatives. Based on these assumptions, 2024 adjusted earnings per share are targeted at approximately $12.00.
AGCO will host a conference call with respect to this earnings announcement at 10 a.m. Eastern Time on Thursday, May 2. The Company will refer to slides on its conference call. Interested persons can access the conference call and slide presentation via AGCO's website at www.agcocorp.com in the "Events" section on the "Company/Investors" page of the website. A replay of the conference call will be available approximately two hours after the conclusion of the conference call for 12 months following the call. A copy of this press release will be available on AGCO's website for at least 12 months following the call.
Safe Harbor Statement
Statements that are not historical facts, including the projections of earnings per share, production levels, sales, industry demand, market conditions, commodity prices, currency translation, farm income levels, margin levels, strategy, investments in product and technology development, new product introductions, restructuring and other cost reduction initiatives, production volumes, tax rates and general economic conditions, are forward-looking and subject to risks that could cause actual results to differ materially from those suggested by the statements. The following are among the factors that could cause actual results to differ materially from the results discussed in or implied by the forward-looking statements.
Further information concerning these and other factors is included in AGCO's filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2023 and subsequent Form 10-Qs. AGCO disclaims any obligation to update any forward-looking statements except as required by law.
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and distribution of agricultural machinery and precision ag technology. AGCO delivers value to farmers and OEM customers through its differentiated brand portfolio including core brands like Fendt®, GSI®, Massey Ferguson®, PTx and Valtra®. AGCO's full line of equipment, smart farming solutions and services helps farmers sustainably feed our world. Founded in 1990 and headquartered in Duluth, Georgia, USA, AGCO had net sales of approximately $14.4 billion in 2023. For more information, visit www.AGCOcorp.com. For company news, information, and events, please follow us on X: @AGCOCorp. For financial news on X, please follow the hashtag #AGCOIR.
Please visit our website at www.agcocorp.com
AGCO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in millions) | |||
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| March 31, 2024 | | December 31, 2023 |
ASSETS | | | |
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