DULUTH, Ga., October 29, 2013 — AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.5 billion during the third quarter of 2013, an increase of approximately 7.9% compared to net sales of $2.3 billion for the third quarter of 2012. Net income for the third quarter of 2013 was $1.27 per share. These results compare to net income of $0.96 per share for the third quarter of 2012. Excluding the unfavorable currency translation impact of approximately 1.8%, net sales in the third quarter of 2013 increased approximately 9.7% compared to the third quarter of 2012.
Net sales for the first nine months of 2013 were approximately $7.9 billion, an increase of approximately 9.2% compared to the same period in 2012. For the first nine months of 2013, net income was $4.61 per share. This result compares to net income of $4.25 per share for the first nine months of 2012. Excluding the unfavorable impact of currency translation of approximately 1.6%, net sales for the first nine months of 2013 increased approximately 10.8% compared to the same period in 2012.
Third Quarter Highlights
- Strong sales growth in South America and Asia/Pacific. Regional sales results(1): South America +35%; Asia/Pacific (“APAC”) +11%; North America +9%; Europe/Africa/ Middle East (“EAME”) (2)%;
- Operating margins reached 8.0% in the third quarter of 2013, a 190 basis point improvement vs the third quarter of 2012. Regional operating margin performance: North America 11.4%, EAME 9.1%, South America 12.6%, APAC (2.0)%
- Full-year Earning Per Share guidance remains at approximately $6.00 per share
- Launched new Global Precision Farming Initiative: Fuse™ Technologies (announced in July, http://www.agcocorp.com/news/media_press_releases.aspx)
- Announced joint venture with Russian Machines to manufacture and distribute agricultural equipment and replacement parts in Russia (announced in September, http://www.agcocorp.com/news/media_press_releases.aspx)
(1)Excludes currency translation impact. See reconciliation of Non-GAAP measures in appendix.
“Attractive farm economics are supporting global demand for agricultural equipment, and our third quarter sales reflected this,” stated Martin Richenhagen, Chairman, President and Chief Executive Officer. “AGCO’s focused execution in the third quarter produced improved operating margins and record earnings. Increased sales and production levels, modest material cost inflation and our cost control initiatives all contributed to AGCO’s improved results. Our profitability and our cash flow are growing while we are aggressively investing in advanced technology and emerging markets. In the third quarter, our strategic investments included the launch of Fuse™ Technologies and our new joint venture with Russian Machines.”
Industry Unit Retail Sales
Nine months ended September 30, 2013
Prior Year Period
Prior Year Period
“Global demand for farm equipment remained elevated during the third quarter as harvests were well underway in the Northern Hemisphere,” stated Mr. Richenhagen. “Improved yields in North America and the expectation of near record farm income supported strong industry sales. Healthy crop production supported demand in France and Germany, while less favorable crop conditions negatively impacted demand in the United Kingdom and parts of Northern Europe. In Brazil, favorable soft commodity prices, improved crop production and supportive government financing programs are all contributing to high levels of demand for farm equipment. Our long-term industry outlook remains very positive with an expected increase in global grain consumption driven by the world’s growing population and a shift towards more protein heavy diets. Higher grain consumption and lower inventory levels should support healthy commodity prices and farm income, which are key factors influencing demand in our industry.”
AGCO Regional Net Sales (in millions)
% change from
2012 due to
Three months ended September 30
Nine months ended September 30
(1) See Footnotes for additional disclosure
Net sales grew 8.9% in AGCO’s North American region during the first nine months of 2013 compared to 2012, excluding the negative impact of currency translation. Sales were strongest in the row crop segment, with the most significant increases in high horsepower tractors, sprayers and implements. Increased sales, a favorable product mix and margin improvement initiatives contributed to growth in income from operations of $65.9 million for the first nine months of 2013 compared to the same period in 2012.
South American net sales grew 29.9% in the first nine months of 2013 compared to the same period in 2012, excluding the negative impact of currency translation. Sales were higher in both Brazil and Argentina, with growth mainly in high horsepower tractors, combines and sprayers. Operating margins improved to 11.4% for the first nine months of 2013 compared to 8.2% in the same period last year due to higher sales, a richer mix of products and the benefit of cost-reduction initiatives. Income from operations increased $69.3 million for the nine months of 2013 compared to 2012.
Net sales in AGCO’s EAME region improved by 4.1% in the first nine months of 2013 compared to the first nine months of 2012, on a constant currency basis, despite weaker market conditions. Higher sales in France and Germany were partially offset by declines in the United Kingdom and Central Europe. EAME’s income from operations increased $15.5 million for the nine months of 2013 compared to 2012. The benefit of higher sales and improved efficiency at our new Fendt tractor assembly facility was partially offset by increased engineering expenses associated with new Tier 4 emission requirements.
Excluding the negative impact of currency translation, net sales in the Asia/Pacific region were 19.2% higher in the first nine months of 2013 compared to the same period in 2012. Growth in China, East Asia and Australia produced most of the increase. Income from operations in the Asia/Pacific region declined by $7.7 million in the first nine months of 2013 compared to the same period in 2012. The benefit of higher sales was offset by increased market development costs in China.
Global industry demand is expected to be relatively flat in 2013 compared to 2012. Strong growth is projected in South America, modest growth is forecasted in North America and modest declines are anticipated for Western Europe. AGCO is targeting earnings per share of approximately $6.00 for the full year of 2013. Net sales are expected to range from $10.8 billion to $11.0 billion. Gross margin improvement is expected to be partially offset by increased market development expenses and higher engineering expenditures to meet Tier 4 final emission requirements.
“As we bring this year to a successful close, we remain focused on delivering improved margins, earnings growth and strong free cash flow,” continued Mr. Richenhagen. “The long-term outlook for the farming industry and for AGCO remains compelling. We are positioning AGCO for profitable growth in the years ahead by making strategic investments in our production facilities to improve our efficiency and in higher technology products that will make farmers more productive and more profitable.”
AGCO, Your Agriculture Company, (NYSE: AGCO), is a global leader focused on the design, manufacture and distribution of agricultural machinery. AGCO supports more productive farming through a full line of tractors, combines, hay tools, sprayers, forage equipment, tillage, implements, grain storage and protein production systems, as well as related replacement parts. AGCO products are sold through five core machinery brands, Challenger®, Fendt®, Massey Ferguson®, Valtra® and GSI®, and are distributed globally through 3,150 independent dealers and distributors in more than 140 countries worldwide. Retail financing is available through AGCO Finance for qualified purchasers. Founded in 1990, AGCO is headquartered in Duluth, Georgia, USA. In 2012, AGCO had net sales of $10.0 billion. For more information, see http://www.agcocorp.com.