AGCO Reports Fourth Quarter Results

• Record full year net sales of $14.4 billion
• Full year reported operating margin of 11.8% and adjusted operating margin⁽³⁾ of 12.0%
• Full year reported earnings per share of $15.63 and adjusted earnings per share⁽³⁾ of $15.55
• Introduces outlook for 2024 full year net sales of ~$13.6 billion and earnings per share of ~$13.15

Net sales for the full year of 2023 were approximately $14.4 billion, which is an increase of 13.9% compared to 2022. Excluding favorable currency translation impacts of 0.1%, net sales for the full year of 2023 increased 13.8% compared to 2022. For the full year of 2023, reported net income was $15.63 per share, and adjusted net income(3) was $15.55 per share. These results compare to reported net income of $11.87 per share and adjusted net income(3) of $12.42 per share in 2022.

Mr. Hansotia continued, “For 2024, we will remain focused on our primary growth initiatives as well as driving further operational efficiencies. We expect these efforts to mitigate some of the softening industry demand. More challenging global market conditions are expected in 2024 due to reduced commodity prices and modestly lower farm income expectations. Despite a lower sales forecast, we expect higher and more resilient margins compared to past cycles due to structural improvements in our business. We will continue to accelerate investments in premium technology, smart farming solutions and enhanced digital capabilities to support our Farmer-First strategy while helping to sustainably feed the world.”

• Reported fourth-quarter regional sales results⁽¹⁾: Europe/Middle East (“EME”) +3.3%, North America +8.3%, South America (38.9)%, Asia/Pacific/Africa (“APA”) +11.3%
• Constant currency fourth-quarter regional sales results^(1)(2)(3): EME +1.4%, North America +7.1%, South America (42.0)%, APA +11.5%
• Fourth quarter regional operating margin performance: EME 16.2%, North America 9.0%, South America 3.8%, APA 8.0%
• Full-year reported operating margins and adjusted operating margins⁽³⁾ improved to 11.8% and 12.0% respectively, in 2023 compared to 10.0% and 10.3% in 2022

⁽¹⁾As compared to fourth quarter 2022.
⁽²⁾Excludes currency translation impact.
⁽³⁾See reconciliation of Non-GAAP measures in appendix.

⁽⁴⁾ Excludes compact tractors.

⁽⁵⁾ Based on Company estimates.

“Near record global crop production in 2023 has resulted in increased grain inventories and commodity prices have correspondingly retreated from the very high levels seen over the last 24 months,” stated Mr. Hansotia. “Although still strong by historical levels, farm income was down modestly across the major regions in 2023 and another modest decline is projected for 2024. Much of the industry fleet has been refreshed over the last three years and dealer inventories have been re-stocked. Full-year global industry retail sales of farm equipment in 2023 were lower in AGCO’s key markets, with weaker sales of smaller equipment being partially offset by higher sales of larger machines.”

North American full-year industry retail tractor sales declined 3% compared to the previous year. Lower sales of smaller equipment, more closely tied to the general economy, were partially offset by strong growth of highhorsepower tractors and combines. Relatively favorable commodity prices, extended fleet age and precision ag technology stimulated demand from row crop farmers. Lower projected farm income and a refreshed fleet is expected to pressure industry demand in 2024, resulting in weaker North American industry sales compared to 2023.

South American industry retail tractor sales decreased 8% during 2023 compared to the previous year. Retail demand in Brazil was negatively affected by funding shortfalls of the government-subsidized loan program. Healthy farm income, supportive exchange rates and continued expansion in planted acreage drove increases in high-tech farm equipment, which partially offset weaker smaller equipment demand due to financing delays. Following three strong years, retail demand in South America is expected to further soften in 2024 as a result of lower commodity prices and farm income.

Industry retail tractor sales in Western Europe decreased 4% for the full year of 2023 compared to high levels in 2022. Farmer sentiment in the region has continued to be negatively impacted by the conflict in Ukraine and higher input cost inflation. Further declines in industry demand are expected in 2024 as lower income levels pressure demand from arable farmers, while healthy demand from dairy and livestock producers is expected to mitigate some of the decline.

⁽¹⁾See Footnotes for additional disclosures.

AGCO’s North American net sales increased 18.0% for the full year of 2023 compared to 2022, excluding the impact of favorable currency translation. Positive pricing and increased sales of high-horsepower tractors, application equipment as well as combines represented the largest increases. Income from operations for the full year of 2023 increased $180.5 million compared to 2022 and operating margins were 12.2%. The improvement was the result of positive net pricing and favorable product mix, partially offset by higher selling, general, and administrative expenses (“SG&A expenses”) and engineering expenses.

Net sales in the South American region increased 2.6% for the full year of 2023 compared to 2022, excluding the impact of favorable currency translation, despite significant declines in the fourth quarter. Positive pricing impacts and favorable product mix of high-horsepower tractors accounted for most of the increase. Sales increases in Brazil were partially offset by lower sales in Argentina. Despite significant discounting in the fourth quarter, income from operations for the full year of 2023 increased by $12.5 million compared to 2022. This increase was primarily a result of positive net pricing, partially offset by lower sales volume and considerable dealer termination charges.

Net sales in the Europe/Middle East region increased 17.3% for the full year of 2023 compared to 2022, excluding negative currency translation impacts. Healthy growth across the major European markets contributed to the improvement. Positive pricing and increased sales of mid-range and high-horsepower tractors as well as replacement parts produced most of the growth. Income from operations increased $316.5 million for the full year of 2023 compared to 2022 and operating margins improved 240 basis points. The improvement was driven by positive net pricing, partially offset by higher SG&A expenses and engineering expenses.

Asia/Pacific/Africa’s net sales were approximately flat, excluding the negative impact of currency translation, during the full year of 2023 compared to 2022 due to positive pricing offset by lower tractor and combine sales volumes. Higher sales in Australia were mostly offset by lower sales in Japan. Income from operations decreased $39.6 million for the full year of 2023 compared to 2022 due to higher material and labor costs and higher SG&A expenses.