CEMA, the European Agricultural Machinery Industry Assn. reports that the general business climate index for the agricultural machinery industry in Europe has improved slightly but continues deeply negative at –59 points (on a scale of –100 to +100 ). This is the sharpest and deepest drop off since the financial crisis of 2008-09. Some 60% of the industry representatives consider their current business to be unfavorable and 75% expect their turnover to decline in the next 6 months.
Although the restrictions due to COVID-19 are no longer quite as stringent as they were a month ago, some are still in place and impacting the economy. On average of all companies participating in the survey, the production capacity utilization is only at 74% of the level before COVID-19. According to the companies, their suppliers are providing 80% and their partners on the distribution side are running business at only 66 % of the level before the coronavirus pandemic.
Thanks to the high order intake prior to the COVID-19 outbreak, the order volume is at a relatively good level. However, the order backlog is expected to disappear as production resumes. For the coming 6 months, more than 70% of industry representatives expect further declines in incoming orders. According to this survey results, the actual order intake dissipated in the last month. Again, almost three-quarters of the companies reported falling orders, both from the EU market and from outside the EU, with more than half of them even reporting double digit decreases.
Nevertheless, the industry is seeing a little light at the end of the tunnel. Regarding the turnover for the full year, fewer survey participants (20% vs. 30% one month ago) forecast a decline of more than 20%, indicating a slightly improved average industry forecast; –10% in May vs. –13% in April).This correction might be the result of an expectation that the order intake will improve again in a few months so that some losses can be recovered toward the end of the year.