Multinational agricultural machinery giant AGCO reported its results for the first quarter, ending March 31, 2020 earlier this month.
AGCO owns a number of well-known agricultural machinery brands, including Massey Ferguson, Fendt, Valtra and Challenger.
Net sales for the first quarter were approximately $1.9 (€1.76) billion, a decrease of approximately 3.4% compared to the first quarter of 2019.
This amounted to gross profit of $450.5 (€416.4) million, income before income taxes and equity in net earnings of affiliates of $84.5 (€78.1) million, and net income of $66.3 (€61.3) million.
Excluding “unfavourable currency translation impacts” of approximately 3.6%, net sales in the first quarter of 2020 increased approximately 0.2% compared to the first quarter of 2019, the company said.
‘Challenging conditions’
Martin Richenhagen, AGCO’s chairman, president and CEO, said: “AGCO delivered solid results for the first quarter under challenging conditions.
“AGCO’s current priorities are the safety of our employees and serving the world’s farmers as we do our part to minimize the impact of the COVID-19 pandemic on the world’s food supply.
“We are facing a very dynamic environment requiring rigorous and coordinated business planning to manage our manufacturing, supply chain and aftermarket operations, to effectively serve our dealers and end-customers as well as to maintain a productive workforce.
In addition to restarting factories and ramping up production, we remain focused on maintaining parts and service support for our dealers and our customers.
“Our first quarter results demonstrated strong execution as we overcame Covid-19 related production disruptions in China and Europe to expand operating margins compared to the first quarter of last year,” Richenhagen said.
“Strong performance in our North America region highlighted our results driven by improved product availability and an increase in the retail demand of our products.”
The CEO also noted that the firm’s precision planting business produced “significantly improved” results over the prior year in its seasonally important first quarter.
Europe/Middle East region results remained “solid” but were impacted by production interruptions late in March “despite a strong order board”.
“In April, we also added over $500 (€462) million in liquidity with the completion of a new term loan facility,” Richenhagen added.
Operations performance
In its operations performance statement, the firm noted that, in most areas, AGCO’s business has been deemed essential, thereby allowing the company to maintain operations.
However, it was highlighted that production was severely impacted by component supply availability, particularly during late March and throughout April, which directly impacted sales levels.
The affected plants all resumed production in late April, and all but one of AGCO’s major production facilities are currently operational, the company noted.
The ability to maintain full-time production remains uncertain for the foreseeable future due to potential supply chain constraints, workforce limitations, safety equipment availability and government restrictions.
In a breakdown of impacts on AGCO’s regional production to date, the firm said:
- China production was suspended early in the first quarter; now producing near normal levels;
- All major European factories suspended production in late March through most of April, with production currently resumed with one exception; Suolahti Finland facility suspended production as of Thursday, April 30, due to a supplier fire with restart date expected in June. Summer maintenance and vacation shutdown period are planning to be pulled forward to increase production capacity for the balance of the year;
- Primary South American factories production suspended during the majority of April with restart dates in late April;
- North American factory production maintained with no interruption. Capacities are limited in some cases due to workforce constraints.
Turning to its outlook forecast for the remainder of 2020, AGCO said, given the uncertainty caused by the Covid-19 pandemic, it withdrew all guidance for its 2020 results on March 23, 2020.
“A considerable amount of uncertainty remains for the balance of 2020 relating to industry demand, production constraints and other impacts of the pandemic,” the company said.
“AGCO’s focus is on employee safety, serving customers and operating as effectively as possible under these challenging conditions.”
