USA – AGCO Corporation, a global leader in the design, manufacture, and distribution of agricultural machinery, suffered a loss in the second quarter that ended June 30, including the estimated loss on its Grain & Protein business, which it has agreed to sell to American Industrial Partners.
The company recorded a net loss of US$368.9 million, starkly contrasting with a net income of US$319.2 million in the same period last year. For the first half of the year, AGCO sustained a loss of US$200.9 million compared to a net income of US$551.8 million for the first six months of 2023.
Eric Hansotia, AGCO’s chairman, president, and CEO, attributed the disappointing results to weakening market conditions and strategic production cuts aimed at reducing inventory levels.
“While we continue to successfully execute our farmer-first strategy, second-quarter results were influenced by weakening market conditions and significant production cuts aimed at reducing our company and dealer inventories,” Hansotia said.
He noted that declines in commodity prices and lower projected farm income for 2024 have negatively impacted farmer sentiment and global industry demand. In response, AGCO has implemented aggressive measures, including a restructuring program to control expenses, reduce production levels, and lower investments in working capital.
In a strategic move to streamline operations, AGCO announced on July 25 plans to sell its Grain & Protein business to American Industrial Partners.
The sale includes five primary Grain & Protein brands: GSI, Automated Production, Cumberland, Cimbria, and Tecno, but excludes AGCO’s Grain & Protein business in China.
Hansotia expressed optimism about the sale, stating, “Going forward, we will be better positioned for long-term growth in our higher margin and higher free cash flow generating businesses. Simultaneously, it will raise our profitability through the cycle as Grain & Protein has historically been a below-average margin business.”
Lower commodity prices have exacerbated the financial pressures, further strained farm income, and led to weaker global demand across most equipment categories. AGCO’s total sales for the quarter dropped 15% to US$3.2 billion, with sales for the first six months down nearly 14% to US$6.2 billion.
Regionally, North American net sales decreased by 20% in the first half of 2024 compared to the same period in 2023, driven by softer industry sales, lower end-market demand, and de-stocking efforts.
South American sales plummeted by 41%, primarily due to softer industry sales and under-production relative to retail demand. In contrast, the Europe/Middle East region experienced a more modest decline of 2.8%, with growth in Germany, Turkey, and France offset by lower sales in other European markets.
The Asia/Pacific/Africa region saw a 26% decrease in net sales, mainly due to lower sales in China, Australia, and Africa.
Despite these challenges, AGCO projects net sales for the year, including the positive impact of its joint venture with PTx Trimble, to be US$12.5 billion, reflecting lower sales volumes and adverse foreign currency translation.
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