South American net sales grew 27.1% in the first half of 2013 compared to the same period in 2012, excluding the negative impact of currency translation. Higher sales in Brazil and Argentina produced most of the increase. Brazilian farmers benefited from an improved first harvest compared to the drought-impacted production in early 2012. Operating margins improved to 10.7% for the first six months of 2013 compared to 7.6% in the same period last year due to higher sales and the benefit of cost-reduction initiatives. Income from operations increased $42.4 million for the first half of 2013 compared to 2012.
Net sales improved by 6.3% in AGCO’s EAME region in the first six months of 2013 compared to the first half of 2012, on a constant currency basis, despite softer market conditions. Sales growth in France and Germany was partially offset by declines in the other European markets. EAME’s income from operations in the first half of 2013 was approximately flat compared to the same period in 2012. The benefit of higher sales was offset by increased engineering expenses and transition costs associated with the new Fendt tractor assembly facility during the first half of 2013.
Excluding the negative impact of currency translation, net sales in the Asia/Pacific region were 24.4% higher in the first six 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 $1.3 million in the first half 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. Growth is projected in South America and North America while 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.