AGCO Corp.'s (AGCO) fourth-quarter earnings fell by two-thirds amid slumping demand for farm equipment in North America and Europe.
While fourth-quarter results topped analysts expectations, the company expects sales of tractors and combines to remain sluggish through the first half of 2010, with the exception of South America, where sales increased 31% in the fourth quarter, largely as a result of favorable currency exchange rates.
AGCO is imposing temporary factory shutdowns to reduce equipment inventories. The company said the shutdowns will likely drag down its first-quarter results.
The Georgia-based company forecast 2010 earnings of $1.55 to $1.65 a share on sales of $6.6 billion to $6.8 billion. Analysts surveyed by Thomson Reuters expected earning of $1.63 a share on $6.35 billion of sales.
The company said fourth-quarter results were affected by volatile commodity prices, a late North American fall harvest caused by weather conditions and farmers' continued reluctance to purchase expensive new equipment amid the lingering effects of the economic recession.
Revenue in the quarter dropped 14% to $1.85 billion. Sales in North America plunged 40%, while sales in Europe were off 19%.
AGCO reported a fourth-quarter profit of $33.5 million, or 35 cents a share, down from $98.5 million, or $1.05, a year earlier. The latest quarter included 7 cents of charges. Analysts had forecast earnings of 31 cents, without charges, on $1.7 billion in revenue.
For 2009, AGCO earned $135.7 million, or $1.44 a share, down from $385.9 million, or $3.95 a share, in 2008. Net sales fell 21.3% to $6.63 billion.
AGCO's shares were recently trading up 3.4% at $31.50 a share.