AGCO's CEO Discusses Q4 2011 Results - Earnings Call Transcript
AGCO Corporation (
)
Q4 2011 Earnings Conference Call
February 07, 2012 10:00 AM ET
Executives
Greg Peterson - Director of Investor Relations
Martin Richenhagen - Chairman, President and Chief Executive Officer
Andrew Beck - Senior Vice President and Chief Financial Officer
Analysts
Andy Kaplowitz - Barclays Capital
Jamie Cook - Credit Suisse
Henry Kirn – UBS
Stephen Volkmann - Jefferies & Company
Ann Duignan - J. P. Morgan
Jerry Revich - Goldman Sachs & Co.
Ashish Gupta - Credit Agricole Securities
Vance Edelson - Morgan Stanley
Andrew Casey - Wells Fargo Securities
Adam - RBC Capital Markets
Joel Tiss - Buckingham Research
Presentation
Operator
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AGCO Q4 2008 Earnings Call Transcript
Good morning. My name is Adrian and I'll be your conference operator today. At this time I would like to welcome everyone to the AGCO Corporation 2011 Fourth Quarter Earnings Release Conference Call. (Operator Instructions) I would now like to turn the call over to Greg Peterson. Sir, please go ahead.
Greg Peterson
Thanks Adrian and good morning. Welcome to those of you joining us on the call and also to those of you joining us over the internet for AGCO’s fourth quarter 2011 earnings conference call. We will refer to a slide presentation this morning, which we have posted on our website at
.
Included on the slide presentation are non-GAAP measures which are reconciled to the GAAP measures in the last section of the presentation. We will make forward-looking statements this morning, including those related to projections of earnings per share, sales, market conditions, margin and productivity improvements, commodity prices, farmer income, harvests, weather, market share, industry demands, the impacts of currency translation, new product development and improvements, plant expansion, investments, production volumes and localization, free cash flow, depreciation and amortization, and emission requirements, and the impact of the GSI acquisition.
We wish to caution you that these statements are predictions and that actual events or results may differ materially. We refer you to the periodic reports that we file from time-to-time with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31, 2010. These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. A replay of this call will be available on our corporate website.
On the call with me this morning are Martin Richenhagen, our Chairman, President and Chief Executive Officer; and Andy Beck, our Senior Vice President and Chief Financial Officer. With that, Martin, please go ahead.
Martin Richenhagen
Thank you, Greg and good morning to everyone. 2011 was a very good year for the global farm industry. Farmers made record levels of income and commodity prices reached and remained at attractive levels. AGCO took advantage of these positive conditions and delivered a year of strong sales growth and margin expansion in the 2011 compared to 2010.
AGCO’s adjusted operating margins improved 225 basis points in the full year of 2011, compared to 2010. Gary Collar’s Europe, Africa, Middle-East business delivered exceptional performance with industry demand below peak levels in Western Europe, our EAME’s region produced record sales on a constant currency basis and improved operating margins by over 400 basis points compared to 2010. In North America, we capitalized on healthy industry conditions, grew sales, and improved margins. Bob Crain’s North American business posted operating margins in excess of 5% for the full year of 2011, the best in over 10 years.
Slide 3 summarizes our results for the fourth quarter and full year of 2011. In the fourth quarter, we reported sales growth across all of our regions compared to the fourth of 2010. Adjusted earnings per share reached $1.44 for the fourth quarter, up 64% compared to a year ago. In addition, our strong operating performance translated into improved cash flow.
AGCO’s tractor and combine production volumes for 2010 and 2011 are illustrated on Slide 4. AGCO’s fourth quarter 2011 tractor and combine production grew 8% compared to the same period in 2010. Higher volumes in our North American and European factories were partially offset by lower production levels in our South American region. AGCO’s year-end order board remained well ahead of last year’s levels in our EAME and North American markets. South American order boards remained strong and are about even with 2010 year-end levels. We expect production volumes for the full year of 2012 to be approximately 5% up versus 2011.
Slide 5 details industry unit volumes by region for the full year of 2011. Industry tractor sales in North America were up modestly compared to 2010 levels. In North America, industry sales of utility tractors increased due to improvement in the dairy and livestock sectors. Sales of high horsepower tractors remained elevated and were up slightly from the strong levels in the full year of 2010. As expected, combine industry retail sales were lower in the fourth quarter and were down 4% for the full year of 2011 from the high levels experienced in 2010. Industry tractor unit retail sales in Western Europe were up approximately 12% in the full year of 2011 compared to the weak levels experienced in 2010. Higher commodity prices and improvement in the dairy and livestock sectors contributed to this increase.
Industry growth was strongest in Germany, France, Scandinavia and Finland. South American industry retail sector volumes decreased modestly during the full year of 2011 compared to strong levels in the full year of 2010. Declines in Argentina and Brazil were mostly offset by strong growth in smaller South American markets. Despite this slight downturn in 2011 industry retail sales in Brazil were still the second highest in the history.
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