With AGCO recording net sales of US$2.7 billion for the fourth quarter of 2020, it showed the strength in the farm sector when compared to the same quarter in 2019 a 8.1% gain was realised
This good result took net sales for the full year of 2020 to US $9.1 billion, an increase of 1.2% when compared to 2019.
This result generated approximately US$896.5 million in cash flow from operations and approximately US$626.6 million in free cash flow in 2020
“The AGCO team delivered strong operational results leveraging improving markets to produce sales and earnings growth in the fourth quarter,” stated Eric Hansotia, AGCO’s Chairman, president and CEO.
“Our focused execution allowed us to overcome supply chain difficulties and maintain production levels, while reducing company and dealer inventories, which contributed to significant cash flow generation.
“Our improved results allowed us to maintain our investments in premium technology, sustainable smart farming solutions and enhanced digital capabilities.
“Looking forward to 2021, we are forecasting sales and earnings growth as industry conditions trend positively and we position AGCO for future success.”
“Increased grain consumption, driven by economic recovery and higher export demand, helped to offset a solid year of global crop production leaving year-end grain inventories lower than anticipated,” stated Hansotia.
“Reduced grain stocks supported a rally in soft commodity prices, lifted farmer sentiment and supported higher demand for agricultural equipment during the fourth quarter.”
Net sales in the North American region were flat for the full year of 2020 compared to 2019, excluding the negative impact of currency translation. Increased sales of Precision Planting equipment, high power tractors and parts were offset by lower sales of grain and protein production equipment as well as sprayers.
Income from operations for the full year of 2020 in North America improved approximately US$72.1 million compared to 2019. The benefit of a richer sales mix and cost control initiatives contributed to operating margin improvement.
AGCO’s South American net sales increased 36.6% for the full year of 2020 compared to 2019. Increased sales in Brazil and Argentina were responsible for the growth.
Income from operations for the full year of 2020 was improved compared to 2019 by approximately US$68.7 million.
The improved South America results reflect the benefit of higher sales and production, a richer sales mix, as well as cost reduction initiatives, partially offset by negative currency impacts.
AGCO’s Europe/Middle East net sales were flat for the full year of 2020 compared to 2019.
Sales improved significantly in the second half of the year compared to 2019, offsetting a weak second quarter which was impacted by COVID-19-related production interruptions.
Declines in France, Scandinavia and Central Europe were mostly offset by growth in Germany and Eastern Europe.
Income from operations decreased approximately US$52.9 million for the full year of 2020 compared to 2019, due to lower net sales and production volumes as well as higher warranty costs.
Asia/Pacific/Africa net sales increased 0.9%, excluding the positive impact of currency translation, during the full year of 2020 compared to 2019.
Higher sales in China and Australia were mostly offset by lower sales in Africa and the smaller Asian markets.
Income from operations improved approximately US$18.7 million for the full year of 2020 compared to 2019, due to higher sales and a richer product mix.
AGCO’s net sales for 2021 are expected to range from US$10.2 to US$10.4 billion, reflecting improved sales volumes, pricing and positive foreign currency translation.
Gross and operating margins are projected to improve from 2020 levels, reflecting the impact of higher sales and production volumes as well as margin improvement initiatives.
These improvements are planned to fund increases in engineering and other technology investments to support AGCO’s precision agriculture and digital initiatives.
