Third quarter sales boost for AGCO

By: Andrew Hobbs

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Australian demand a standout in the Asian region for Massey Ferguson, Fendt parent company

Third quarter sales boost for AGCO
AGCO chief financial officer Andy Beck


Massey Ferguson and Fendt parent company AGCO says higher sales in Australia and smaller Asian markets have helped to drive an increase in global third quarter sales to US$2.2 billion.

The increase, up 11.5 per cent on the same period in 2017, was helped by a 7.1 per cent net increase in sales in the year to date across the Asia-Pacific-Africa region, reaching US$554.7 million in the year to date and US$223.6 million in the quarter.

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AGCO says that 2.3 per cent of that sales increase was due to US dollar benefits of currency translations, while acquisitions had helped boost the sales figures by another 2.5 per cent during the first nine months of 2018.

"Income from operations improved approximately US$3.7 million in the first nine months of 2018, compared to the same period in 2017, due to higher sales and production levels," the company added.

Sales were also up significantly in other divisions, with year to date sales in North America up 22 per cent, up 9 per cent in South America and 15 per cent in Europe and the Middle East.

AGCO senior vice president and chief financial officer Andy Beck told brokers in a conference call that the company expects to make US$9.3 billion in sales for the 2018 calendar year.

"We expect gross and operating margins to be improved from 2017 reflecting the positive impact of higher sales volumes and cost reduction efforts, partially offset by investments in our strategic initiatives," he says.

The company also expects to spend US$250 million in capital expenditure, up about US$50 million on 2017, due in part to higher material costs.

Managing these costs better and continuing to invest in products and business opportunities will be a priority for AGCO across the remainder of 2018, Beck says, adding that its forecast assumes relatively stable industry demand across all regions.

"Operating margins are expected to improve due to higher sales levels and the benefits of our productivity and purchasing initiatives, partially offset by the investments we are making in long term programs and higher material costs," he says.

"Our plan includes market share improvement with price increases ranging from 1.5 per cent to 1.75 per cent on a consolidated basis."

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