On February 16, when Deere & Co. issued its first-quarter earnings for fiscal 2011, the results were far better than the world’s largest farm equipment maker anticipated just a few months ago. As a result, the company has raised its sales outlook for North America and the rest of the world for the remainder of the fiscal year. Originally, Deere was looking at essentially the same sales levels in 2011 as it saw in FY 2009.
AGCO, on the other hand, which reported its fourth-quarter and full-year earnings on February 8, says it’s too early to revise its market outlook. Like Deere’s original forecast, AGCO, which is the third largest ag machinery maker in the world, is looking at flat sales during calendar year 2011.
Last week Deere reported worldwide net sales and revenues for the first quarter increased 27%, to $6.119 billion, compared with $4.835 billion last year. Net sales of the equipment operations were $5.514 billion for the quarter compared with $4.237 billion a year ago.
The company’s Ag & Turf sales increased by 21% for the quarter and operating profit rose to $558 from $352 million for the first quarter last year.
Deere’s total equipment sales now are projected to be up 18-20% for fiscal 2011 and up about 25% for the second quarter compared with the same periods of the previous year.
Worldwide sale of Ag & Turf machinery are forecast to increase by about 16% for full-year 2011. After staging a healthy advance in 2010, industry farm-machinery sales in the U.S. and Canada are forecast to be up about 5% vs. flat in its original projections.
AGCO has adopted a more-cautious outlook for global market demand in 2011 because it is still too early to change guidance, says CEO Martin Richenhagen in an interview with Dow Jones Newswires this past Sunday.
"We are in line with Deere for the U.S. but more conservative for Brazil, which we know pretty well,
and especially Europe, a very important market for us," Richenhagen told Dow Jones Newswires. "Europe is a market which is very difficult to predict. It is very fragmented and it really went down in 2009. We see signs of recovery, we have strong order books, but it is too early to change our guidance," Richenhagen said.
In South America, where AGCO is the market leader in tractors, the company said it sees equipment demand softening this year as the Brazilian government scales back some of the loan assistance offered to farmers in recent years to purchase equipment.
Meanwhile, in North America, AGCO expects industry-wide demand for machinery to be flat in 2011, after strong sales growth in 2010 that was likely propelled by higher prices in 2011 for additional emissions-reduction components. AGCO sees modest improvement in demand in western Europe.
Richenhagen said AGCO would release new forecasts in April.
— Ag Equipment Intelligence