DULUTH, GEORGIA, U.S. — AGCO, a manufacturer and distributor of agricultural equipment, posted a 13% increase in net sales for the year and a 28% increase in adjusted net income for 2018.
The company posted net sales of $9.4 billion for the year, up from $8.3 billion in 2017. For the fourth quarter ended Dec. 31, 2018, net sales were $2.6 billion, up 2.6% from the same quarter a year earlier.
Adjusted net income for the year was $310 million, or $3.89 per share, compared with $242 million, or $3.02 a share, in 2017.
“AGCO delivered solid results in 2018 while making important investments to position us for future success,” said Martin Richenhagen, chairman, president and chief executive officer of AGCO. “Sales growth across all of our regions and solid operational execution allowed AGCO to meet its financial targets for 2018 and deliver improved results compared to 2017. We are growing our business by delivering the broadest product offering in the industry.
“AGCO will continue to invest in new products, new technology, improved distribution and enhanced digital capabilities in order to improve our margins and produce higher returns on our invested capital.”
Net sales in the North American region improved approximately 16% in the full year of 2018 compared to 2017. Acquisitions benefited sales by approximately 6% in 2018. Sales growth was strongest for sprayers, hay tools and grain storage equipment. Income from operations increased $36.2 million for the full year of 2018 compared to 2017, primarily due to the benefit of higher sales and margin improvement.
South American net sales increased approximately 4.5%, excluding unfavorable currency translation impacts, in the full year of 2018 compared to 2017. The improvement primarily was driven by higher sales in Brazil partially offset by weaker demand in Argentina. Income from operations in the fourth quarter of 2018 increased $9.7 million compared to the same period in 2017.
AGCO’s Europe/Middle East net sales increased 13% in the full year of 2018 compared to 2017. Acquisitions benefited sales by 2.3% during 2018 compared to the full year of 2017. Sales growth was achieved in the key markets of Germany, France and the United Kingdom. Income from operations rose $107.8 million in 2018 due to the benefit of higher sales and margin improvement.
Net sales in AGCO’s Asia/Pacific/Africa region, excluding the negative impact of currency translation, increased 10% in 2018. Sales growth was driven primarily by Australia and China. Acquisitions benefited sales by nearly 2% during the full year of 2018 compared to 2017. Income from operations improved approximately $800,000 in 2018 compared to the full year of 2017 due to the impact of higher sales.
Global industry demand is projected to improve modestly in 2019. AGCO’s net sales for 2019 are expected to reach $9.6 billion, reflecting improved sales volumes and positive pricing, offset by unfavorable foreign currency translation impacts. Gross and operating margins are expected to improve from 2018 levels, reflecting the positive impact of pricing and cost reduction efforts. Based on these assumptions, 2019 earnings per share is targeted to be $4.60.