Global weather extremes are largely to blame for the 2.8% drop in AGCO net sales to around US$4.4 billion for the first six months of this year when compared to the same period in 2018.
“Wet weather and flooding in the US delayed planting, curtailed planted acreage and reduced 2019 crop production estimates,” said AGCO boss Martin Richenhagen.
“We expect North American industry retail tractor sales to be relatively flat in 2019 compared to last year. Modestly higher sales of small tractors and hay and forage equipment are expected to offset lower retail sales in the row crop segment compared to last year.”
Increased harvests in Brazil and Argentina should provide some offset to lower production in North America, he continued. “While negative in the short term for farm income and farm equipment demand, forecasts for lower crop production and lower ending inventories of grain have moved commodity prices higher, which could be positive for global farm income in the future.”
Mr Richenhagen added that the continued warm, dry growing conditions across much of Europe stressed the development of the winter wheat, while milk prices remain supportive of the dairy sector.
“Industry retail sales in Western Europe increased in the first six months of 2019, following a year of mixed results in 2018 for the arable farming segment.”
Sales growth was strongest in France, Central Europe and Germany. Partially offset by weaker sales in Scandinavia, the UK and Italy, for the full year of 2019, industry demand in Western Europe is expected to be flat compared to 2018.
“While we have lowered our production schedule to align with market demand, we have raised our earnings outlook for the full year to reflect our confidence in our continued strong margin performance.”
Global industry demand this year is expected to be consistent with 2018 levels and AGCO’s net sales for 2019 are projected to be flat compared to 2018 at approx. $9.4 billion.
