Previous Statements by AGCO
» AGCO's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» AGCO's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» AGCO's CEO Discusses Q3 2011 Results - Earnings Call Transcript
We'll be making forward-looking statements this morning, including projections of earnings per share, sales, demand, government financing programs, market conditions, farm incomes and production, commodity prices, margins, currency translation, pricing increases, productivity, investments in product development, facilities and expanding markets, inventory and production models, acquisition impacts, completion of facility construction and upgrades, industry demand, general economic conditions, engineering efforts, depreciation, free cash flow, supplier issues and capital expenditures.We wish to caution you that these statements are predictions and that actual 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, 2011. These documents discuss important factors that could cause the actual results to differ materially from those contained in our forward-looking statements. And finally, 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. Now I'd like to turn the call over to Martin. Please go ahead. Martin H. Richenhagen Thank you, Greg, and good morning to everyone. AGCO posted another quarter of outstanding results with strong sales growth and record quarter earnings. We took advantage of healthy market conditions while executing against our important margin improvement initiatives and delivered second quarter sales growth of over 14% and gross margin expansion of 200 basis points compared to the second quarter of 2011. Both our Europe, Africa, Middle East and North American business delivered operating margins in excess of 12%, and our South American margins rebounded to 9%. North America posted operating margins of 10% in its core business for the second quarter, the best in over 10 years.
Slide 3 summarizes our results for the second quarter and first half of 2012. In the second quarter, we reported sales close [ph] across all of our regions compared to the second quarter of 2011 on a constant currency basis. Adjusted earnings per share for the second quarter was $2.08 and reflected both strong execution and the benefit of higher production volumes. In the second half of 2012, we plan to increase our investments in new product development and facility and market expansion.AGCO forecast for tractor and combine production volumes for 2011 are illustrated on Slide 4. Second quarter 2012 production was up 5% compared to the second quarter of 2011. High-horsepower tractor and combine production was about flat with the second quarter of last year in North America and Europe, but production of lower-horsepower tractors were up. Production levels in our South American factories were modestly lower than the levels in the second quarter of 2011. In September, we expect to start our production in the new assembly facility at Schengen [ph] Marktoberdorf, Germany. The production schedule in Germany was more heavily weighted towards the first half of the year to compensate for lower production during the third quarter when the new assembly facility will be brought online. The production schedule at our Valtra plant in Finland was lower in the first half of 2012 compared to 2011 in conjunction with our SAP conversion and offset some of the increase in Germany. AGCO's order board at the end of June remained in very good shape. In Europe, the order board is down about 10% from very high levels at the end of June 2011. North America high-horsepower tractor and combine orders are down about 5% compared to June 2011 levels. While order books are still healthy, we are closely monitoring the impact on orders in the second half demand from the severe drought being further caused much of the U.S. corn belt. The order board in South America is up about 20% compared to June 2011 levels. We expect production volumes to be up modestly for the remainder of the year. And for the full year of 2012, we expect production to be up approximately 10% from 2011 levels. Read the rest of this transcript for free on seekingalpha.com