AGCO has reported its results for the third quarter ended Sept. 30, 2021. Net sales for the third quarter were approximately $2.7 billion, an increase of approximately 9.1% compared to the third quarter of 2020. Excluding favorable currency translation impacts of approximately 1.6%, net sales in the third quarter of 2021 increased approximately 7.5% compared to the third quarter of 2020.
Net sales for the first 9 months of 2021 were approximately $8 billion, an increase of approximately 24.1% compared to the same period in 2020. Excluding favorable currency translation impacts of approximately 4.5%, net sales for the first 9 months of 2021 increased approximately 19.6% compared to the same period in 2020. For the first 9 months of 2021, reported net income was $8.11 per share, and adjusted net income, excluding restructuring expenses and the reversal of a valuation allowance previously established against the Company’s deferred tax assets in the United States, was $7.30 per share.
“Strong operational execution and robust end-market demand produced higher sales, earnings growth and margin expansion during the third quarter,” stated Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer. “AGCO continues to face unprecedented supply chain and logistics disruptions as well as material and freight cost inflation. Supply chain constraints have intensified in the recent weeks limiting our ability to meet our production and sales projections. Our efforts are focused on minimizing the impact of the supply chain disruptions to deliver strong full-year sales and earnings growth. Global market conditions remain positive as favorable farm economics are allowing farmers to upgrade and replace their aging fleets. With order boards significantly ahead of last year, we continue to see a strong response for our technology-focused products. AGCO will continue its investment in premium technology, smart farming solutions and enhanced digital capabilities to support our farmer-first strategy and profitably grow the business and earn high returns for its stockholders.”
AGCO’s North American net sales grew 15.6% in the first 9 months of 2021 compared to the same period of 2020, excluding the positive impact of currency translation. Increased sales of tractors, Precision Planting products and replacement parts represented the largest increases. Income from operations for the first nine months of 2021 increased approximately $30.5 million compared to the same period in 2020, while operating margins were generally flat with last year. Higher sales and production, a richer mix of products and the benefit of favorable pricing contributed to the improvement in operating income, and helped to offset higher material costs.
Net sales in the South American region increased 53.4% in the first 9 months of 2021 compared to the COVID-impacted 9 months of 2020, excluding the impact of unfavorable currency translation. Sales grew across key markets, driven by improved industry conditions and pricing impacts. Income from operations in the first 9 months of 2021 increased by approximately $70.3 million compared to the same period in 2020 and operating margins reached 9.3%. The improved South America results reflect the benefit of higher sales and production, in addition to a favorable sales mix, with improved pricing offsetting material cost inflation.
AGCO’s Europe/Middle East net sales increased 15.1% in the first nine months of 2021 compared to the same period in 2020, excluding favorable currency translation impacts. 2020 sales were negatively impacted by extended plant shutdowns during the first half of 2020. Increased sales of high and medium horsepower tractors and replacement parts represented the largest increases. Income from operations grew approximately $157.3 million in the first nine months of 2021, compared to the same period in 2020, while operating margins expanded to 12.2%. The improvements were the result of higher net sales and production volumes.
Net sales in Asia/Pacific/Africa increased 25.7%, excluding the positive impact of currency translation, in the first 9 months of 2021 compared to the same period in 2020. Higher sales in Africa, China as well as Australia produced most of the increase. Income from operations improved by approximately $39.7 million in the first 9 months of 2021 compared to the same period in 2020.
The health, safety and well-being of all AGCO employees, dealers and farmer customers continue to be AGCO’s top priority. The ability of the Company’s supply chain to deliver parts and components on schedule is currently difficult to predict. The following outlook is based on AGCO’s current estimates of component deliveries. AGCO’s results will be impacted if the actual supply chain delivery performance differs from these estimates.
Net sales for the full year of 2021 are expected to range from $10.9 billion to $11.1 billion reflecting improved sales volumes, positive pricing and favorable foreign currency translation. Higher sales and production volumes as well as pricing benefits are projected to offset material cost inflation to produce improved gross and operating margins. The improved profitability is expected to fund increases in engineering and other technology investments to advance AGCO’s precision agriculture and digital initiatives. Supported by these assumptions, 2021 earnings per share are targeted in a range from $8.75 to $9.00.