AGCO reports 3Q13 Results: Reported net sales of approximately $2.5 billion during the third quarter of 2013, an increase of approximately 7.9% compared to net sales of $2.3 billion for the third quarter of 2012. Net income for the third quarter of 2013 was $1.27 per share. These results compare to net income of $0.96 per share for the third quarter of 2012.
Sales growth YoY: South America +19.3%; Asia/Pacific ("APAC") +6.7%; North America +8.6%; Europe/Africa/ Middle East ("EAME") (2.4)%; Total up 7.9%.
Commentary: "Attractive farm economics are supporting global demand for agricultural equipment, and our third quarter sales reflected this," stated Martin Richenhagen, Chairman, President and Chief Executive Officer. "AGCO's focused execution in the third quarter produced improved operating margins and record earnings. Increased sales and production levels, modest material cost inflation and our cost control initiatives all contributed to AGCO's improved results. Our profitability and our cash flow are growing while we are aggressively investing in advanced technology and emerging markets. In the third quarter, our strategic investments included the launch of Fuse(TM) Technologies and our new joint venture with Russian Machines."
"Global demand for farm equipment remained elevated during the third quarter as harvests were well underway in the Northern Hemisphere," stated Mr. Richenhagen. "Improved yields in North America and the expectation of near record farm income supported strong industry sales. Healthy crop production supported demand in France and Germany, while less favorable crop conditions negatively impacted demand in the United Kingdom and parts of Northern Europe. In Brazil, favorable soft commodity prices, improved crop production and supportive government financing programs are all contributing to high levels of demand for farm equipment. Our long-term industry outlook remains very positive with an expected increase in global grain consumption driven by the world's growing population and a shift towards more protein heavy diets. Higher grain consumption and lower inventory levels should support healthy commodity prices and farm income, which are key factors influencing demand in our industry."
Outlook: Global industry demand is expected to be relatively flat in 2013 compared to 2012. Strong growth is projected in South America, modest growth is forecasted in North America and modest declines are anticipated for Western Europe. AGCO is targeting earnings per share of approximately $6.00 for the full year of 2013. Net sales are expected to range from $10.8 billion to $11.0 billion. Gross margin improvement is expected to be partially offset by increased market development expenses and higher engineering expenditures to meet Tier 4 final emission requirements.
"As we bring this year to a successful close, we remain focused on delivering improved margins, earnings growth and strong free cash flow," continued Mr. Richenhagen. "The long-term outlook for the farming industry and for AGCO remains compelling. We are positioning AGCO for profitable growth in the years ahead by making strategic investments in our production facilities to improve our efficiency and in higher technology products that will make farmers more productive and more profitable