Reported net income was
'AGCO demonstrated strong execution of its Farmer First-strategy in the first quarter,' said
'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
Reported regional sales results(2):
Constant currency regional sales results(1)(2)(3): EME +0.1%,
Regional operating margin performance: EME 16.4%,
Market Update
'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.
In
Outlook
On
AGCO's net sales for 2024, including the positive impact of PTx Trimble, are expected to be approximately
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.
Our financial results depend entirely upon the agricultural industry, and factors that adversely affect the agricultural industry generally, including declines in the general economy, adverse weather, tariffs, increases in farm input costs, lower commodity prices, lower farm income and changes in the availability of credit for our retail customers, will adversely affect us.
We maintain an independent dealer and distribution network in the markets where we sell products. The financial and operational capabilities of our dealers and distributors are critical to our ability to compete in these markets. Higher inventory levels at our dealers and high utilization of dealer credit limits could negatively impact future sales and adversely impact our performance.
On
A majority of our sales and manufacturing takes place outside
We cannot predict or control the impact of the conflict in
Most retail sales of the products that we manufacture are financed, either by our joint ventures with
Both AGCO and our finance joint ventures have substantial accounts receivable from dealers and end customers, and we would be adversely impacted if the collectability of these receivables was less than optimal; this collectability is dependent upon the financial strength of the farm industry, which in turn is dependent upon the general economy and commodity prices, as well as several of the other factors listed in this section.
We have experienced substantial and sustained volatility with respect to currency exchange rate and interest rate changes, which can adversely affect our reported results of operations and the competitiveness of our products.
Our success depends on the introduction of new products, particularly engines that comply with emission requirements and sustainable smart farming technology, which require substantial expenditures; there is no certainty that we can develop the necessary technology or that the technology that we develop will be attractive to farmers or available at competitive prices.
Our expansion plans in emerging markets, including establishing a greater manufacturing and marketing presence and growing our use of component suppliers, could entail significant risks.
Our business increasingly is subject to regulations relating to privacy and data protection, and if we violate any of those regulations, or otherwise are the victim of a cyberattack, we could be subject to significant claims, penalties and damages.
Cybersecurity breaches including ransomware attacks and other means are rapidly increasing. We continue to review and improve our safeguards to minimize our exposure to future attacks. However, there always will be the potential of the risk that a cyberattack will be successful and will disrupt our business, either through shutting down our operations, destroying data, exfiltrating data or otherwise.
We depend on suppliers for components, parts and raw materials for our products, and any failure by our suppliers to provide products as needed, or by us to promptly address supplier issues, will adversely impact our ability to timely and efficiently manufacture and sell products. Recently suppliers of several key parts and components have not been able to meet our demand and we have had to decrease our production levels. In addition, the potential of natural gas shortages in
Any resurgence of COVID-19, or other future pandemics, could negatively impact our business through reduced sales, facilities closures, higher absentee rates, and reduced production at both our plants and the plants that supply us with parts and components. In addition, logistical and transportation-related issues and similar problems may also arise.
We recently have experienced significant inflation in a range of costs, including for parts and components, shipping, and energy. While we have been able to pass along most of those costs through increased prices, there can be no assurance that we will be able to continue to do so. If we are not, it will adversely impact our performance.
We face significant competition, and if we are unable to compete successfully against other agricultural equipment manufacturers, we would lose customers and our net sales and performance would decline.
We have a substantial amount of indebtedness (and have incurred additional indebtedness as part of the PTx Trimble joint venture transaction), and, as a result, we are subject to certain restrictive covenants and payment obligations, as well as increased leverage generally, that may adversely affect our ability to operate and expand our business.
Further information concerning these and other factors is included in AGCO's filings with the
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,
Contact:
Tel: 404-403-6042
Email: greg.peterson@agcocorp.com
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