AGCO reported net sales of $1.8 billion for the second quarter of 2009, a decrease of 25%, compared to net sales of $2.4 billion for the second quarter of 2008. Income from operations for the second quarter and first six months of 2009 decreased $111.3 million and $146.9 million, respectively, compared to the same periods in 2008. The decline resulted from a decrease in net sales, reduced gross margins and the negative impact of currency translation.
In the North American region, sales in the second quarter declined less than 1% on a constant currency basis compared to the same period in 2008.
AGGO lowered production by 35% compared to the second quarter of 2008 and inventories declined by more than $235 million from March 31, 2009 levels. Through a combination of layoffs, temporary furloughs, and the dismissal of temporary employees, their workforce was lowered by 17% since the beginning of the year.
Industry unit retail sales of tractors under 100 hp declined 25% in the second quarter compared to the prior year. High horsepower tractors were down 9% in the second quarter compared to strong levels in the prior year. Industry unit retail sales of combines for the second quarter of 2009 grew by 27% compared to the second quarter of the prior year.
The unstable global economy has created uncertainty about market conditions, and worldwide industry demand for farm equipment is expected to soften for the remainder of 2009. In North America, the market is expected to decline with the largest reduction in low and medium horsepower tractors. AGCO's earnings are expected to be impacted by lower sales and production volumes and by engineering expenses for new product development and Tier 4 emission requirements.
For More Information: AGCO