AGCO reported net sales of approximately $1.7 billion for the third quarter of 2015, a decrease of approximately 19.4% compared to net sales of approximately $2.2 billion for the third quarter of 2014. Reported net income was $0.77 per share for the third quarter of 2015. These results compare to reported net income of $0.69 per share and adjusted net income, excluding restructuring and other infrequent expenses, of $0.71 per share for the third quarter of 2014. Excluding unfavorable currency translation impacts of approximately 15%, net sales in the third quarter of 2015 decreased approximately 4.4% compared to the third quarter of 2014.
Net sales for the first nine months of 2015 were approximately $5.5 billion, a decrease of approximately 23.9% compared to the same period in 2014. Excluding the unfavorable impact of currency translation of approximately 13.5%, net sales for the first nine months of 2015 decreased approximately 10.4% compared to the same period in 2014. For the first nine months of 2015, reported net income was $2.33 per share and adjusted net income, excluding restructuring and other infrequent expenses, was $2.45 per share. These results compare to reported net income of $3.50 per share and adjusted net income, excluding restructuring and other infrequent expenses, of $3.52 per share for the first nine months of 2014.
Third Quarter Highlights
- Regional sales results(1): North America (3.7)%, Europe/Africa/Middle East (“EAME”) 3.7%, South America (23.8)%, Asia/Pacific (“APAC”) (3.8)%
- Regional operating margin performance: EAME 7.7%, North America 8.3%, South America 4.5%, APAC (2.2)%
- Inventory at September 30, 2015: approximately $305 million lower than September 30, 2014 on a constant currency basis(1)
- EPS positively impacted by a lower effective tax rate versus third quarter 2014 (24.9% vs 40.4%)
- Share repurchase program reduced outstanding shares by 3.5 million during the first nine months of 2015
- Full-year 2015 earnings per share guidance increased to approximately $3.20 (from approximately $3.10)
(1)Excludes currency translation impact. See reconciliation of Non-GAAP measures in appendix.
"Our third quarter was highlighted by focused operational performance with cost control and inventory management efforts helping to lessen the impacts of weak global industry demand and currency pressures,” stated Martin Richenhagen, AGCO’s chairman, president and chief executive officer. “Our emphasis during these challenging times is on operational execution through efforts like AGCO Production Systems and new product introductions like our new Valtra T-series and N-series tractors. In addition, AGCO recently launched our Fuse Connected Services, a suite of technology-enabled services designed to help growers improve overall farm efficiency by reducing maintenance and input costs, improving yields and enabling more informed business decisions. We will continue to invest in new technologies, product innovation and new precision agriculture service capabilities — both within AGCO, and by partnering with leading technology companies.”
|9 Months Ended Sept. 30,2015||
(Change from Prior Year Period)
(1) Excludes compact tractors
“With much of the strong U.S. harvest already in the grain bins, and with healthy crop production across Europe and South America, we are experiencing the third consecutive year of robust global harvests,” continued Richenhagen. “Elevated crop production is pressuring grain prices and farm income, resulting in softer demand for farm equipment. In North America, industry sales have progressively declined through the first nine months of the year. Weaker demand from the large farm sector resulted in significant declines in industry retail sales of high-horsepower tractors, combines and sprayers. More stable sales of hay and forage equipment and small tractors, due to more normal conditions in the livestock sector, has provided a partial offset to the decline in large agricultural equipment. Industry retail sales in Western Europe declined more modestly from 2014 levels. Margins for dairy producers remained weak, and lower commodity prices kept market demand soft from the arable farming segment. Declines were most pronounced in the United Kingdom, Finland and Germany. Industry demand in South America has weakened throughout 2015. The lower sales were driven primarily by significant declines in Brazil due to weakness in the general economy, changes to the government financing program and softness in the sugar sector. Longer term, we are optimistic about the fundamentals supporting commodity prices and farm income as well as healthy growth in our industry.”