AGCO, the parent company of Fendt, Massey Ferguson and Valtra, reports net sales of around US$6.2 billion for the first half of this year. This is a decrease of 13.7% on the same six months in 2023.
Following yesterday’s story on the dip in fortunes at CNH, AGCO is the next major player to publish lower financial results. This year started badly for AGCO with net sales down 12.1% in the first three months to US$2.9 billion (US$3.3 billion Q1, 2023). Things did not improve in the second quarter of this year, with net sales of US$3.2 billion down 15.1% on the US$3.8 billion in Q2, 2023.
The concern’s second quarter results were influenced by weakening market conditions and significant production cuts aimed at reducing the company’s and dealer inventories, comments AGCO boss Eric Hansotia, who adds that declines in commodity prices and lower projected farm income have negatively affected farmer sentiment, further dampening global industry demand.
The AGCO top man expects increased adoption of precision technology, but more challenging farm economics are resulting in weaker global industry demand across most equipment categories. “In the first half of 2024, retail tractor industry demand fell by an average of 8.0% across the three major regions (North America, South America and Europe),” he said.
In Western Europe, industry retail tractor sales decreased 5.0% during the first half of this year compared to the first six months of 2023. Growth in Germany, Turkey and France was offset by lower sales across nearly all the other European markets (weakest conditions in Italy, the UK and Scandinavia) and AGCO Europe/Middle East region net sales decreased 2.8% in the first six months of 2024 compared to the same period in 2023. Declines across nearly all equipment categories were mostly offset by increased sales of high-horsepower tractors.
Looking ahead, AGCO expects industry demand to soften for the remainder of this year as lower income levels pressure demand from arable farmers. Healthy demand from dairy and livestock producers is expected to mitigate some of the lower sales volumes and AGCO forecasts full year net sales of around US$12.5 billion; well down on last year’s record US$14.4 billion.
Incidentally, AGCO is selling its grain and protein business in a US$700 million transaction that includes GSI. More information next week.
CNH affected by lower industry demand – Profi
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