AGCO reported net sales of approximately $1.7 billion for the second quarter of 2010, down 1.4% compared to the second quarter of 2009.
Reported and adjusted net income per share, which excludes restructuring and other infrequent expenses, were $0.66 for the second quarter of 2010.
Net sales for the first six months of 2010 were $3.1 billion, a decrease of approximately 6.9% compared to the same period in 2009. Excluding the favorable impact of currency translation of approximately 4.2%, net sales for the first six months of 2010 decreased approximately 11.1% compared to the same period in 2009.
“AGCO's robust performance in South America was the key to our results in the second quarter of 2010,” stated Martin Richenhagen, chairman, president and chief executive officer.
“AGCO's market leadership position in Brazil allowed us to take advantage of strong market conditions by doubling our sales and expanding our margins in that region, compared to the second quarter of 2009. This success offset lower results in the Europe/Africa/ Middle East segment due to the weak conditions that we are facing across the Western European markets.
“In the second half, our focus will remain on cost control, margin improvement and working capital management. We will also be making investments in factory productivity initiatives aimed at expanding our margins and increasing asset returns in the coming years.”
In the North American region, sales in the second quarter of 2010 declined approximately 19.3% compared to the second quarter of 2009. Industry unit retail sales of tractors in the first six months of 2010 increased approximately 2% in North America compared to the same period in 2009. Growth in high-horsepower tractors and compact tractors was partially offset by a decline in utility tractors. Strong row crop farm fundamentals contributed to the strength in retail sales of high-horsepower tractors and combines.
Continued weakness in the dairy and livestock sectors contributed to lower industry unit retail sales of mid-range tractors and hay equipment, which both declined compared to the first six months of 2009. In North America, the expectation of strong yields and improved farm economics is maintaining demand for large tractors and combines by the professional producer segment.
Lower sales and increased expenditures on engineering efforts primarily aimed at meeting new emission standards resulted in a decline in income from operations of approximately $27.1 million for the first six months of 2010 compared to the same period in 2009.
Global industry sales are expected to be mixed in 2010 compared to 2009. In South America, strong industry conditions are expected to continue in the second half of 2010, but relatively flat compared to a strong second half of 2009.
North American industry demand is expected to remain stable for the remainder of the year. Market conditions are expected to remain weak but stable in Western Europe during the second half of 2010. Comparisons to 2009 will be more favorable in the second half of the year due to weak conditions in Western Europe in the second half of 2009.
AGCO is targeting adjusted earnings per share in a range from $1.85 to $2.00 for the full year of 2010. Net sales are expected to range from $6.7 billion to $6.8 billion.
Gross margin improvements are expected to be partially offset by higher engineering expenses for new product development and Tier 4 emission requirements, as well as higher pension costs. Earnings per share projections exclude restructuring expenses that are expected to be incurred in the Company's European operations and are estimated to be approximately $0.06 per share for the full year of 2010.