AGCO was able to hold its ground on the global agricultural equipment market despite the challenges. Even with declining markets in North America, South America and also Europe, AGCO was able to surpass analysts’ expectations with its results for the quarter.
AGCO was able to hold its ground on the global agricultural equipment market despite the challenges. Even with declining markets in North America, South America and also Europe, AGCO was able to surpass analysts’ expectations with its results for the quarter.
Strong performance despite challenging international market conditions
Dr Rob Smith, AGCO Senior Vice President and General Manager Europe, Africa and Middle East (EAME).
“AGCO EAME showed strong performance in a challenging market environment,” reports Dr Rob Smith, AGCO Senior Vice President and General Manager Europe, Africa and Middle East (EAME). The results for the quarter, which AGCO announced in its second quarter report in August, also back this up. In North America, tractor sales decreased ten percent compared to the prior year and in South America, they even declined 30 percent. In comparison, sales in Europe only declined one percent. Despite the decline, AGCO was able to achieve a stable result and thus surpass the expectations of Wall Street market analysts. The operating margin in the second quarter 2016 was higher than that of the second quarter 2015. “The business conditions in Europe are really tough,” says Dr Rob Smith, describing the market situation. “Sales in the second quarter were excellent in the region EAME. We achieved a plus of five percent, although the market declined by one percent.” Dr Rob Smith announces price increases for the agricultural equipment industry in 2017. This is due to the 33-percent increase in steel prices in the past six months, as well as increasing wages in Germany..
The market strategy “Route 66” is a success
“Our Route 66 market strategy has contributed to the good second quarter performance,” explains Dr Rob Smith, confirming the success of the new distribution structure. As prime examples for the successful implementation of the market strategy with distributors, the AGCO Senior Vice President mentions the Lantmännen company in Scandinavia and the RWZ Rhein-Main eG in Germany. “Route 66” includes exclusive distribution channels for the AGCO brands Massey-Ferguson and Fendt. Both brands offer a full line of products. The portfolio includes tractors, combines, balers and, starting this year, also forage harvesting equipment. The mowers, tedders and hay rakes come from the AGCO Centre of Excellence for forage harvesting in Feucht, Germany. “At the end of the harvest 2016, we can report that the performance of our combines in field operations was very successful. We are proud of their excellent performance under difficult harvesting conditions,” says Dr Rob Smith, highlighting the good performance of AGCO/Fendt Harvesting.
