The healthy global industry demand for new tractors and machines was responsible for the nearly 14% increase in AGCO net sales last year when compared to 2022 to around US$14.4 billion.
There is no mention of Massey Ferguson or Valtra (two other brands in the AGCO stable) in the official end of year statement, but AGCO boss Eric Hansotia says that the increase was driven largely by the precision ag business, the expanded parts and service business and ‘high margin growth initiatives of globalizing a full-line of our Fendt branded products.’
All markets were in the plus for AGCO. Continued expansion of the planted acreage is fuelling more investment in high-tech farm equipment in South America, where net sales increased 5.3% to US$2.2 billion. The percentage growth was even higher in North America where increased sales of high-horsepower tractors, application equipment and combines were behind the 18.0% rise in net sales to US$3.7 billion).
The Europe/Middle East (EME) region is traditionally the strongest for AGCO and last year’s healthy growth across the major European markets resulted in a 17% increase in net sales to approx. US$7.5 billion. Much of the increase came from positive pricing, increased sales of mid-range and high-horsepower tractors, and replacement parts.
Looking ahead to the rest of 2024, Mr Hansotia expects the reduced commodity prices and modestly lower farm income expectations to soften industry demand. “Much of the industry fleet has been refreshed over the last three years and dealer inventories have been re-stocked,” he says.
Lower projected farm income and a refreshed fleet is expected to pressure industry demand in North America, resulting in weaker industry sales compared to 2023. Following three strong years, retail demand in South America is expected to further soften this year as a result of lower commodity prices and farm income.
He adds that farmer sentiment in EME continues to be negatively impacted by the Ukraine situation and higher input cost inflation. Further declines in industry demand are expected in the region this year as lower income levels pressure demand from arable farmers, while healthy demand from dairy and livestock producers is expected to compensate for some of the decline.
AGCO expects that the lower global sales volumes will result in reduced net sales of around US$13.6 billion in 2024.
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