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AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.3 billion for the first quarter of 2014, a decrease of approximately 2.9% compared to net sales of $2.4 billion for the first quarter of 2013. Net income for the first quarter of 2014 was $1.03 per share. These results compare to net income of $1.19 per share for the first quarter of 2013. Excluding unfavorable currency translation impacts of approximately 2.1%, net sales in the first quarter of 2014 decreased approximately 0.8% compared to the first quarter of 2013.
First Quarter Highlights
Regional sales results (1): North America +5%, Europe/Africa/ Middle East (“EAME”) +1%, South America -9%, Asia/Pacific (“APAC”) -17%
Regional operating margin performance: EAME 9.8%, North America 8.6%, South America 7.9%, APAC -1.3%
Full year earnings per share guidance maintained at $6.00
Share repurchase program reduces outstanding shares by 4.2 million during Q1 2014
(1)Excludes currency translation impact.See reconciliation of Non-GAAP measures in appendix.
“AGCO performed well in the first quarter with relatively flat sales and stable gross margins compared to the first quarter of 2013, despite softer market conditions and a weaker product mix across most of the global markets,” stated Martin Richenhagen, Chairman, President and Chief Executive Officer. “We are focusing our efforts on increasing productivity and reducing material costs throughout our operations to offset these market headwinds. We also demonstrated our commitment to return cash to stockholders by making meaningful progress with the $500 million share repurchase program announced in December of 2013.”
Market UpdateIndustry Unit Retail Sales
Quarter ended March 31, 2014
TractorsChange fromPrior Year Period
CombinesChange fromPrior Year Period
“While row crop economics generally remain healthy, grain prices have declined significantly from the levels in early 2013, and income for grain producers in most regions is expected to be lower in 2014 compared to 2013,” stated Mr. Richenhagen. “More recently, a cold, late winter that has delayed planting across much of North America and the ongoing political uncertainty in Eastern Europe have both contributed to a recent increase in crop prices. Industry demand in North America continues at healthy levels with softening sales of high-horsepower tractors and combines offset by growth in the lower horsepower categories due to improved conditions in the dairy and livestock sectors. Demand for farm equipment remains mixed across Western Europe, with a similar shift in demand from the arable farming sector to the dairy sector. Industry sales have started to recover in the United Kingdom and have remained healthy in Germany. Demand continues to be weak in Finland and has softened in France. Industry sales declined sharply in Brazil as delays with government financing programs and weaker demand from the sugar producers limited sales in early 2014. Despite these near-term challenges, the longer-term trends that have increased demand for grains are expected to intensify, supporting healthy long-term fundamentals for the agricultural industry.”