Farm equipment manufacturer Agco reported a steep sales drop in 2024 amid declining farm income and high dealer inventory.
Despite decreased sales, Agco was somewhat pleased with its financial performance given that the “North American industry decline in 2024 was the worst single-year decline since the downturn in 2009 associated with the financial crisis,” President and Chief Executive Eric Hansotia said during today’s earnings call.
“Our margin resiliency in this challenging environment is clear evidence that we have structurally improved the company through our ongoing transformation efforts over these past years,” he said.
The company also made key portfolio changes in the fourth quarter, including divesting most of its grain and protein business in a $700 million all-cash deal, Hansotia said.
BY THE NUMBERS: Duluth, Ga.-based Agco reported the following full-year numbers in its fourth quarter earnings statement:
- Net sales totaled $11.7 billion in 2024, down 19.1% year over year;
- North American retail tractor sales fell 13% YoY;
- North American retail combine sales dropped 22% YoY;
- Total assets rose 20.5% fell 2% YoY to $11.2 billion; and
- Total liabilities totaled $7.1 billion, up 5.7% YoY.
STATE OF PLAY: Lower commodity prices and rising farmer debt contributed to decreased equipment sales in 2024, Hansotia said during the call.
“Demand is expected to remain effectively flat in 2025 due to mixed market dynamics,” he said. “As with other cycles, industry demand will recover. It’s a matter of when, not if. Ag will benefit from the long-term growth of the agricultural equipment segment thanks to a growing population and a middle class with diets that consist of greater amounts of protein,” he said.
NOTEWORTHY: Agco plans to cut production hours by 15% to 20% in 2025 and is “laser focused” on reducing dealer inventories amid soft demand and elevated inventory levels, Hansotia said.
“In North America, we reduced the units on hand at the dealers by approximately 7% from quarter three levels,” he said. “However, given the challenging outlook in 2025, we are still at approximately nine months of supply versus our six-months target. The current environment will result in significantly lower production levels, at least for the first half of 2025.”
MARKET REACTION: Shares of Agco [NYSE: AGCO] were down 5.1% from market open to $98.09 as of market close today. It has a market capitalization of $7.3 billion.
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