DULUTH, GEORGIA, U.S. — AGCO posted net income of $7.6 million in the third quarter ended Sept. 30, equal to 10 per share on the common stock, down sharply from $71.1 million, or 90¢ per share, in the same period a year ago. The most recent quarterly results included a non-cash adjustment to establish a valuation allowance against the company’s Brazilian net deferred income tax assets of approximately $53.7 million.
Net sales for the quarter totaled $2.1 billion, down 4.8% from $2.2 billion a year ago. Excluding unfavorable currency translation impacts of approximately 3.1%, net sales in the third quarter of 2019 decreased approximately 1.7% compared to the third quarter of 2018.
“AGCO achieved solid third-quarter results considering a challenging environment of weakening industry conditions and negative currency impacts,” said Martin Richenhagen, chairman, president and chief executive officer of AGCO. “Our continued focus on margins supported our third-quarter performance, where we experienced sales declines. Price increases as well as cost control initiatives and productivity improvement efforts allowed us to offset the impact of lower sales and production volumes in the third quarter. We are also making significant progress on our growth initiatives through the development and global expansion of our smart-farming and high technology product lineup. While the current market environment is uncertain, the long-term outlook for our industry and for AGCO remains positive with our focus on both operational efficiency and innovative solutions that support productivity on the farm.”
Net income in the first nine months of fiscal 2019 totaled $213.5 million, or $2.79 per share, up 14% from $186.8 million, or $2.36 per share, in the same period a year ago.
Net sales for the first nine months of 2019 totaled $6.5 billion, down 3% from $6.8 billion in the same period in 2018. Excluding unfavorable currency translation impacts of approximately 4.8%, net sales during the first nine months of 2019 increased approximately 1.4% compared with the same period in 2018.
“Farming conditions continue to be challenging in many of our key markets,” Richenhagen said. “A late harvest and early winter weather are pressuring corn and soybean harvests in North America. In Europe, wheat production is improved from last year despite a second consecutive year of dry conditions. Varied forecasts for crop production and ending inventories of grain have created uncertainty in the short-term but have recently moved commodity prices higher.”
Net sales in North America increased 0.7% in the first nine months of the year, excluding the negative impact of currency translation.
Sales in South America decreased 9.7%, reflecting low levels of industry demand and company production.
Europe and Middle East sales were up 5% in the first nine months, with sales growth strongest in France, central Europe and Spain.
Asia/Pacific/Africa net sales decreased 7.9%, with lower sales in Asia and Australia partially offset by sales growth in Africa.
Looking ahead, net sales for the year are projected to decline modestly to $9.3 billion from a year earlier, the company said, reflecting the negative impact of currency translation and relatively flat sales volumes.
Gross and operating margins are expected to improve from 2018 levels. Based on these assumptions, 2019 earnings per share are targeted at approximately $4.37 on a reported basis, or approximately $5.10 on an adjusted basis, which excludes a non-cash deferred income tax adjustment and restructuring expenses, AGCO said.