The global downturn in ag continues to affect financial results at farm machinery manufactures.
At AGCO, which released its third quarter earnings figures Wednesday, business is down 19.4% year-over-year, with net sales of $1.7 billion for 2015’s third quarter.
The market for heavy farm equipment remains soft, with North American combine sales falling 33% and North American tractor sales—excluding compact tractors--slipping 11% in the third quarter. AGCO’s South American business is also slowing, with tractor sales slipping 24% and combine sales dropping 35%.
Overall, AGCO’s net North American sales posted a 6.9% decline year-over-year. Other regions followed suit, including South America (down 49.1%); Europe, Africa, and the Middle East (down 12.8%); and the Asia/Pacific region (down 18.3%).
(Those figures include the impact of “currency translation” that affects a global company such as AGCO.)
Where row crop farmers are weak, though, livestock producers and hay farmers are stronger, giving AGCO sales a welcome boost. “More stable sales of hay and forage equipment and small tractors, due to more normal conditions in the livestock sector, has provided a partial offset to the decline in large agricultural equipment,” said Martin Richenhagen, AGCO’s chairman, president and CEO.
He said in a statement that AGCO is responding to the downturn by focusing efficiency for itself and its customers. “Our third quarter was highlighted by focused operational performance with cost control and inventory management efforts helping to lessen the impacts of weak global industry demand and currency pressures,” Richenhagen said. “Our emphasis during these challenging times is on operational execution through efforts like AGCO Production Systems and new product introductions like our new Valtra T-series and N-series tractors. In addition, AGCO recently launched our Fuse® Connected Services, a suite of technology-enabled services designed to help growers improve overall farm efficiency by reducing maintenance and input costs, improving yields and enabling more informed business decisions. We will continue to invest in new technologies, product innovation and new precision agriculture service capabilities--both within AGCO, and by partnering with leading technology companies.”
Based on its results year-to-date, AGCO expects about $7.5 billion in net sales in 2015, with annual earnings per share of $3.20.