AGCO States Its Outlook for the Coming Year

December 23, 2008 06:00 PM
 
 
 
AGCO CEO Martin Richenhagen is proud of the company's performance in 2008. As for the year ahead, he says machinery sales will return to 2007 levels.
 
In their point of view, AGCO presented the following sales outlook for these markets as compared to 2008 numbers:
  • North America, flat to down 5%
  • South America, down 15 to 20%
  • Western Europe down 5 to 10%  
Company executives presented their outlook at their annual analyst briefing on Dec. 18. They cite that the fundamentals for the agricultural machinery business – world population growth, limited land for production, improved diet and biofuel production – have not changed, and will continue to be strong. In support of that statement, the two months before the briefing posted unprecedented sales for the company.
 
Moving forward, AGCO says it's looking beyond the current turmoil to find its opportunities for growth. The company will continue their rebranding strategy to align products with the Challenger, Fendt, Massey Ferguson and Valtra global brands, which accounted for 86% of company's total net machinery sales in 2007.
 
Increased investments in research and development will continue, and by the end of 2008, the company will have tripled its 2002-level R&D budget to $200 million.
 
As for product development, the company has new tractors and harvesting equipment in its production pipeline.
 
  • A new high hp model Fendt tractor is schedule to make its debut.
  • A group of new high horsepower tractors for the major markets will be launched and at 290 hp will feature the most power fixed frame tractor on the market. These models will feature Fendt transmissions, Sisu engines, and a new cab design. And AGCO will launch a global utility tractor platform to align costs and designs.
  • The company plans to introduce its forage harvester by 2012. A sugar cane harvester is also being developed.
     
Powering up its engine lineup and producted outfitted with these engines, AGCO has introduced e3. This is the company's approach to meeting the stricter emissions guidelines with selective catalytic reduction (SCR) emission technology. Promoted as having no tradeoff for lower emissions with lower fuel efficiency, the current SCR engines reduce fuel consumption by 5% to 10%.
 
Another ongoing project at AGCO is streamlining their dealer network. AGCO currently has 3,000 independent dealers in their distribution network worldwide. There are 850 dealers in North America, which is down from the 1,600 dealers a few years ago. Specifically for the Challenger brand, out of the top 20 dealers in 2008, 11 of them are CAT dealers.
 
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