Agco ( AG - Get Report) dropped 13% Monday after posting weaker-than-expected second-quarter numbers. The Duluth, Ga., maker of agricultural equipment said earnings dropped to $41 million, or 45 cents a share, from the year-ago $46 million, or 47 cents a share. Sales slid 8% from a year ago to $1.45 billion. Analysts surveyed by Thomson Financial were looking for a 55-cent profit on sales of $1.49 billion. Agco also said Chairman Robert J. Ratliff will retire. He'll be replaced by Martin Richenhagen, president and CEO. "Market conditions during the second quarter were down in all major regions," said Richenhagen. "In particular, we expect the softening demand for high horsepower tractors to continue in North America due to lower farm income anticipated in 2006. In South America, we expect demand to continue to weaken due to the impact of the strong Brazilian Real and high farm debt levels." The company said it plans a round of cost-cutting that will hit operating earnings to the tune of $10 million through 2008. Agco said full-year sales are expected to be slightly below 2005 levels based on lower industry demand, planned dealer inventory reductions and currency translation. Gross margins are expected to improve despite lower production in 2006 compared to 2005. Agco is targeting an improvement in full year earnings per share ranging up to 10% in 2006. Shares fell $3.35 to $22.35.