AGCO's Q1 2025 Net Sales Drop 30% Year-Over-Year
- Net sales of $2.1 billion, down 30.0% year-over-year
- Reported earnings per share of $0.14 and adjusted earnings per share of $0.41
- Full-year guidance affirmed
DULUTH, Ga. — AGCO reported net sales of $2.1 billion for the first quarter ended March 31, 2025, a decrease of 30.0% compared to the first quarter of 2024. Excluding unfavorable foreign currency translation of 2.4%, net sales in the quarter decreased 27.6% compared to the first quarter of 2024.
"AGCO performed well in the first quarter, which better positions us to navigate global trade uncertainties and continued weak industry demand," said Eric Hansotia, AGCO's chairman, president and CEO. "We made substantial progress in our cost reduction efforts while reducing inventory by cutting production hours in the quarter by approximately 33% year-over-year. These decisive actions coupled with our focus on driving retail sales allowed us to improve dealer inventory levels in both North and South America."
Hansotia continued, "We are seeing a mix of positive signs and risks around the world, requiring us to remain agile as we execute our Farmer-First strategy. The underlying fundamentals in many parts of the world have begun to trend upward with farmer sentiment in Europe improving, U.S. corn prices rising and corn stocks-to-use-ratios at lower levels. However, the global agricultural equipment market is volatile due to tariffs and shifting export demand for grain."
First Quarter Highlights
- Reported regional sales results: Europe/Middle East ("EME") (22.1)%, North America (34.2)%, South America (15.8)%, Asia/Pacific/Africa ("APA") (36.0)%
- Constant currency regional sales results: EME (20.6)%, North America (32.6)%, South America (4.2)%, APA (34.1)%
- Regional operating margin performance: EME 11.6%, North America (5.0)%, South America 0.9%, APA (2.9)%
Hansotia concluded, "As we look around the world, the U.S. may face reduced market access for key exports, while South America is likely to ship more to China. Although U.S. net farm income forecasts have been revised higher on government aid, increased subsidies are not expected to boost demand for farm equipment in the near-term. Brazil's record soybean production and delayed corn planting highlight both growth potential and risks. Persistent rain and poor growing conditions have negatively impacted wheat production across Western Europe with reduced yields reported in several countries. Demand for new equipment has softened further in North America and Europe as a result of volatile crop producer demand."
North America
North American net sales decreased 33.9% in the first three months of 2025 compared to the same period in 2024, excluding the impact of unfavorable currency translation and favorable impact of an acquisition. Softer industry sales and under-production of end-market demand contributed to lower sales. The most significant sales declines occurred in high-horsepower tractors, sprayers and combines. Income from operations for the first three months of 2025 decreased $48.2 million compared to the same period in 2024 and operating margins were (5.0)%. The decrease resulted from lower sales and production volumes.
South America
Net sales in the South American region decreased 6.1% in the first three months of 2025 compared to the same period in 2024, excluding the impact of unfavorable currency translation and favorable impact of an acquisition. Softer industry retail sales and under-production of retail demand drove most of the decrease. Lower sales of high-horsepower tractors and planters accounted for most of the decline. Income from operations in the first three months of 2025 decreased by $9.9 million compared to the same period in 2024. This decrease was primarily a result of lower sales and production volumes as well as negative pricing.
Europe/Middle East
Europe/Middle East region net sales decreased 23.0% in the first three months of 2025 compared to the same period in 2024, excluding the impact of unfavorable currency translation and favorable impact of an acquisition. Lower sales across most of the Western European markets were partially offset by growth in Spain and Eastern Europe. Declines were largest in high-horsepower and mid-range tractors as well as hay equipment. Income from operations decreased $140.7 million in the first three months of 2025, compared to the same period in 2024. This decrease was primarily a result of lower sales and production volumes.
Asia/Pacific/Africa
Net sales in the Asia/Pacific/Africa region decreased 38.0%, excluding unfavorable currency translation impacts and favorable impact of an acquisition, in the first three months of 2025 compared to the same period in 2024 due to weaker end market demand and lower production volumes. Lower sales in Australia, Japan and China drove most of the decline. Income from operations decreased by $11.8 million in the first three months of 2025 compared to the same period in 2024 primarily due to lower sales and production volumes.
Outlook
As previously announced, AGCO's net sales for 2025 are expected to be approximately $9.6 billion, reflecting lower sales volumes and assumed actions to mitigate tariff impacts. Adjusted operating margins are projected to be 7% - 7.5%, reflecting the impact of lower sales, lower production volumes, increased cost controls and flat engineering expenses. Based on these assumptions, 2025 earnings per share are targeted at $4.00 - $4.50. These full-year estimates reflect the projected impact of tariffs in place as of May 1, 2025 across the Company's various jurisdictions along with our planned mitigation actions. Changes to the tariffs or other actions in response to them could result in changes to these estimates.