DULUTH, GEORGIA, U.S. — AGCO sustained a drop in net income and net sales for the year ended Dec. 31, 2019, in part due to challenging market conditions in some regions.
The company posted net income of $122.8 million, equal to $1.63 per share on the common stock, down from $283.7 million a year ago. Net sales were approximately $9 billion, which is a decrease of approximately 3.3% compared with 2018. Excluding unfavorable currency translation impacts of approximately 4.2%, net sales for the full year of 2019 increased approximately 0.8% compared to 2018.
For the fourth quarter, net sales fell 3% to $2.5 billion, which compared with the same quarter a year ago. The company reported a net loss for the quarter of $89.6 million, or $1.17 per share.
“AGCO’s fourth-quarter results reflect the impact of challenging market conditions, particularly in Europe and South America,” said Martin Richenhagen, chairman, president and chief executive officer of AGCO. “In addition, our results were impacted by higher-than-anticipated new product warranty costs as well as charges associated with brand and product rationalizations within our grain and protein business. Despite the lower sales, we made solid progress with our margin improvement efforts and delivered adjusted earnings growth and strong cash flow for the full year. We remain well-positioned to continue investing in premium technology, smart farming solutions and enhanced digital capabilities for our customers in order to improve our global market position. Looking forward to 2020, we are forecasting relatively flat global market demand with further earnings improvement driven by margin development actions targeted in the areas of pricing, purchasing, factory productivity and new product development. As we enter a new decade, I am confident in our industry and AGCO’s long-term strategies to deliver growth and improved returns.”
Global industry retail sales of farm equipment in 2019 were lower across AGCO’s key markets with fourth-quarter industry retail sales significantly lower than the prior year in both Europe and South America, AGCO said.
“Our long-term global view remains positive,” Richenhagen said. “Increasing demand for commodities, driven by the growing world population, rising emerging market protein consumption and biofuel use, are expected to support elevated farm income and healthy conditions in our industry.”
AGCO’s net sales for 2020 are expected to reach approximately $9.2 billion, reflecting improved sales volumes and positive pricing. Gross and operating margins are expected to improve from 2019 levels, reflecting the positive impact of pricing and cost reduction efforts. Based on these assumptions, 2020 earnings per share is targeted in a range from $5 to $5.20.