AGCO reported its results for the first quarter ended March 31, 2021. Net sales for the first quarter were approximately $2.4 billion, an increase of approximately 23.4% compared to the first quarter of 2020. Excluding favorable currency translation impacts of approximately 3.5%, net sales in the first quarter of 2021 increased approximately 19.8% compared to the first quarter of 2020.

Highlights

  • Reported regional sales results: Europe/Middle East (“EME”) 19.2%, North America 10.7%, South America 56.3%, Asia/Pacific/Africa (“APA”) 83.1%
  • Constant currency regional sales results: EME 11.5%, North America 9.7%, South America 83.8%, APA 65.9%
  • Regional operating margin performance: EME 10.9%, North America 12.3%, South America 6.7%, APA 10.5%

Market Update

“AGCO continued its strong operational performance in the first quarter and set records for first quarter operating income and earnings per share,” stated Eric Hansotia, AGCO’s chairman, president and CEO. “Favorable market demand and positive market response to our technology-focused products helped produce sales growth and margin expansion across all regions. Outstanding execution from our team allowed us to minimize the impact of ongoing supply constraints, and an improved pricing environment helped offset material and freight cost inflation. Healthy farm fundamentals are driving robust replacement demand and our order boards remain well ahead of last year. With increased visibility for the coming quarters, we have raised our net sales and earnings forecast for 2021 while enabling continued investment in our premium technology, smart farming solutions and enhanced digital capabilities.”

Regional Results

“The ongoing economic recovery from the COVID-19 pandemic is putting pressure on global grain inventories which are well below last year’s levels,” stated Hansotia. “As a result, prices of soft commodity are supporting more favorable farm economics as well as increased demand for machinery. These improved conditions are expected to generate industry growth across all the major markets in 2021.”

“North American industry retail sales increased in the first three months of 2021 compared to the same period in 2020,” continued Hansotia. “Sales of low horsepower tractors moved above prior peak levels while demand for high horsepower tractors also improved. With the fleet age remaining extended, industry retail sales of North America large agricultural equipment grew approximately 12% in the first quarter. Industry retail sales in Western Europe also increased in the first quarter of 2021 with growth across nearly all major markets. With higher wheat, dairy and livestock prices projecting favorable farm economics, farmer sentiment is expected to remain strong in Western Europe, supporting increased equipment demand in 2021. In South America, industry sales increased during the first three months of 2021 driven by improved demand in both Brazil and Argentina as well as recovery in the smaller export markets. A healthy first crop as well as favorable exchange rates are supporting positive economic conditions for farmers who continue to replace an aged fleet. Our long-term global view remains positive. Increasing demand for commodities, driven by the growing world population, as well as rising emerging market protein consumption and biofuel use, are expected to support elevated farm income and healthy conditions in our industry.”

North America

AGCO’s North American net sales increased 9.7% in the first three months of 2021 compared to the same period of 2020, excluding the positive impact of currency translation. Increased sales of tractors, parts, grain and protein equipment and Precision Planting products generated most of the increase. Income from operations for the first three months of 2021 grew approximately $14 million compared to the same period in 2020 and operating margins reached 12.3%. Higher sales and production as well as the benefit of favorable pricing contributed to the improvement.

South America

Net sales in the South American region increased 83.8% in the first three months of 2021 compared to the same period of 2020, excluding the impact of unfavorable currency translation. Sales grew across all markets with the largest increases in Brazil and Argentina. Income from operations in the first three months of 2021 increased by approximately $25 million compared to the same period in 2020. The improved South America results reflect the benefit of higher sales and production, in addition to a richer sales mix with improved pricing offsetting material cost inflation.

Europe/Middle East

AGCO’s Europe/Middle East net sales increased 11.5% in the first three months of 2021 compared to the same period in 2020, excluding favorable currency translation impacts. Sales growth was achieved in all major markets with high horsepower tractors and parts showing the largest increases. Income from operations increased approximately $42 million in the first three months of 2021, compared to the same period in 2020, due to higher net sales and production volumes.

Asia/Pacific/Africa

Net sales in Asia/Pacific/Africa increased 65.9%, excluding the positive impact of currency translation, in the first three months of 2021 compared to the same period in 2020. Higher sales in China, Australia as well as Africa produced most of the increase. Income from operations improved by approximately $22.3 million in the first three months of 2021, compared to the same period in 2020.

Outlook

The health, safety and well-being of all AGCO employees, dealers and farmer customers continues to be AGCO’s top priority during the COVID-19 pandemic. The following outlook does not contemplate any further sales or production disruptions caused by the pandemic.

AGCO’s net sales for 2021 are expected to range from $10.6 billion to $10.8 billion, reflecting improved sales volumes, pricing and positive foreign currency translation. Gross and operating margins are projected to improve from 2020 levels, reflecting the impact of higher sales and production volumes as well as margin improvement initiatives. These improvements are planned to fund increases in engineering and other technology investments to support AGCO’s precision agriculture and digital initiatives.

 
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