Agco recently held an Analyst Meeting for shareholders and investors during which it set out its vision for the future.
Given the tough business climate of the moment, the company was remarkably bullish in its forecast declaring a target growth of 4%-5% over the industry average.
This would be a notable achievement and one that the company is intending to fulfil through pursuing three major strategies.
Sell more tractors
The first is to make more tractors. This would appear to be stating the obvious, but with a saturated market and fierce competition now coming from Asia, it is not as straightforward as one might assume.
AGCO’s plan therefore is to focus on its premium brand, Fendt, and push for a 70% increase in sales over the next four years in the North and South American markets.
The estimated sales value for Fendt for 2024 is $1 billion, AGCO is wanting to elevate that to $1.7 billion by 2029 – an ambitious target, but the corporation may be betting on the sophistication of its tractors and full line up of machinery as being the major draw to the brand.
AGCO parts and precision
The second string the bow is an increase in Precision Ag sales with a doubling of sales between 2024 and 2029, from around $0.9 billion to $2 billion over the next few years.
This may be somewhat more easily achieved as digital farming is experiencing a natural growth, rather than being a mature market, which is where Fendt is operating.
Path number three is a more modest increase in parts sales from $1.8 billion to $2.3 billion, helped by the company’s desire to enable more of its more modern products to be retrofitted to older machines of all makes.
Altogether AGCO has set out its course for the next few years with a robust plan that should see it answer it various critics, not least of which is TAFE tractors of India.
It will be helped by the low starting point, 2025 is a flat year for sales so as confidence rises turnover should naturally increase all things being equal, it is the question of how much the AGCO board can deliver above and beyond the expected rise in sales which will be of interest to the shareholders.
