DULUTH, GEORGIA, U.S. — Focused operational performance and supportive market conditions boosted AGCO’s net income and sales in the first quarter ended March 31, the company said on May 2.
Excluding unfavorable currency translations, net sales for the quarter increased 6.5% to $1.99 billion. Net income was $65 million, equal to 84 per share, up from $24 million, or 30 per share, in the same period a year ago.
“AGCO’s first-quarter results demonstrated solid progress toward our margin improvement goals for 2019,” said Martin Richenhagen, chairman, president and chief executive officer. “Led by our Europe/Middle East region, AGCO’s first quarter 2019 adjusted operating margins improved over 190 basis points compared to the first quarter of 2018. Our margin expansion resulted from organic sales growth, an improved pricing environment and initiatives aimed at lowering material costs and improving productivity. We have raised our outlook for the full year to reflect our confidence in our continued strong performance and in the market recovery.”
Net sales increased 13.2% in Europe and the Middle East, with growth strongest in France, the U.K. and Spain. Income from operations improved $28.7 million, the company said, due to higher sales and production, pricing and timing of engineering costs.
AGCO saw sales decrease in its other key regions, including North America (down 0.6%), South America (down 2.6%) and Asia/Pacific/Africa (down 9.6%).
Income from operations in North America improved by $3.8 million compared to the same period in 2018, AGCO said, and by $8.1 million in South America. In Asia/Pacific/Africa income from operations declined approximately $1.3 million.
Looking ahead, global industry demand is expected to improve modestly in 2019. AGCO is projecting sales for 2019 to reach $9.5 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 are targeted at approximately $4.88 on a reported basis, or approximately $4.90 on an adjusted basis, which excludes restructuring expenses.