Farm equipment dealers reported a continued decline in sales in the second quarter.
Dealers AGCO and Alamo Group reported slowed unit sales and a rise in assets in Q2, according to their recent earnings calls.
However, the market could improve in 2025, AGCO Chair and Chief Executive Eric Hansotia said in the company’s July 30 earnings call.
“There’s always a big correction year where the industry slows rapidly as farmers reduce their spend on new equipment,” he said. “We are rapidly cutting production this year … in hopes that production and retail demand are more balanced in 2025.”
AGCO
Duluth, Ga.-based AGCO saw declines across the board in Q2. The dealer reported:
- Net sales dropped 15% YoY to $3.2 billion;
- Total assets rose 19.9% to $13.66 billion;
- Total liabilities rose 24.8% YoY to $9.06 billion;
- North American retail tractor sales dropped 8% YoY; and
- Combine unit sales dropped 11% YoY.
Hay equipment, mid-range horsepower tractors and high-horsepower tractors saw the most significant sales drops, according to an AGCO earnings release. Lower demand and de-stocking efforts caused lower sales, according to the release.
AGCO announced on July 25 the sale of its Grain & Protein business, valued at $700 million, to American Industrial Partners as part of AGCO’s restructuring program.
“We believe this sale will better position us for the long-term growth in our higher margin and higher free-cash-flow-generating businesses,” Hansotia said in the earnings call. “Grain & Protein has historically been a below-average margin business.”
The restructuring also includes a 6% reduction in AGCO’s workforce, according to the company’s June 24 8-K filing.
The company expects to end the year with $12.5 billion in net sales, which would be 13.2% lower YoY.
Alamo Group
Seguin, Texas-based dealer Alamo Group saw net declines, though its equipment sales rose in Q2.
- Net sales dropped to $416.3 million, down 5.5% YoY.
- Industrial equipment net sales rose 14.2% YoY to $204.77 million; and
- Total assets rose 3.3% YoY to $1.51 billion.
Despite slowdowns in its vegetation management sector, Alamo Group expects its equipment to continue to do well, Alamo Group Chief Executive and President Jeff Leonard said in the company’s July 24 earnings release.
“The prospects for our Industrial Equipment Division remain excellent for the remainder of 2024 and into the first quarter of 2025, given this division’s robust order backlog and healthy pipeline of active sales opportunities,” Leonard said.
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