Record net sales for AGCO in 2022

AGCO, the worldwide manufacturer and distributor of agricultural equipment and solutions, reported net sales of $3.9 billion for the fourth quarter of 2022, an increase of 23.6% compared to the fourth quarter of 2021.

Fourth quarter sales grew more than 66% in South America, while North America expanded 22.1% and Europe and the Middle East was up 21.7%. Excluding unfavorable currency translation impacts of 9.2%, net sales in the fourth quarter of 2022 increased 32.7% compared to the fourth quarter of 2021.

AGCO reported record results for the fourth quarter and full year of 2022, with combines being a particular bright spot in most regions. (Photo: Chad Elmore)

Net sales for the full year of 2022 were approximately $12.7 billion, which is an increase of 13.6% compared to 2021. Excluding unfavorable currency translation impacts of 8.5%, net sales for the full year of 2022 increased 22.1% compared to 2021, the company said.

“Our record results in 2022, underscored by net sales of approximately $12.7 billion and adjusted operating margin of 10.3%, are the result of continued execution of our strategy,” said Eric Hansotia, AGCO’s chairman, president and CEO. “Our performance was fueled by robust demand for our industry-leading products coupled with continued solid global industry demand.

“Our farmer-first focus was highlighted by our fourth quarter results that not only delivered record net sales and operating margin, but also generated substantial free cash flow. These results are further evidence that our precision ag technology and premier equipment are in high demand and are driving productivity improvements for our farmers while providing us margin-rich growth opportunities.”

Sales of larger tractors rose 3.2% in South America, but fell in both North America (5%) and Western Europe (8.5%). Combines were a different story, with North America (14.6%) and Western Europe (10.2%) higher and South America down (1.6%).

“Supportive farm economics are resulting in robust demand for larger agricultural equipment as farmers continue to replace aging machines,” Hansotia said. “Supply chain constraints have limited industry production, and dealer inventory levels of new and used large agricultural equipment remain below normal levels across the industry. Full year global industry retail sales of farm equipment in 2022 were lower in some of 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 compared to the previous year. Lower sales of smaller equipment, more closely tied to the general economy, were partially offset by strong growth of high horsepower tractors and combines. Favorable commodity prices, extended fleet age and precision ag technology are continuing to stimulate demand for row crop farmers. These conditions are expected to continue in 2023, resulting in flat North American industry sales compared to 2022.

Industry retail tractor sales in Western Europe, decreased 9% for the full year of 2022 compared to high levels in 2021. Farmer sentiment in the region has been negatively impacted by the conflict in Ukraine, higher input cost inflation and while lessening, looming energy concerns. Healthy income levels for arable farmers as well as dairy and livestock producers are expected to support relatively flat retail demand for equipment in 2023 compared to 2022.

In South America, industry retail tractor sales increased 3% during 2022. Strong growth in Argentina and the smaller South American markets offset modestly lower sales in Brazil. Healthy crop production and favorable margins are supporting farm profitability. These supportive economics are expected to drive modestly higher South American 2023 industry sales compared to 2022.

Continued growth expected for 2023

AGCO’s net sales for 2023 are expected to be approximately $14.0 billion, reflecting improved sales volumes and pricing partially offset by negative foreign currency translation. “For 2023, we expect continued sales growth and margin expansion as industry demand remains strong and our farmer-first strategy continues to gain traction,” Hansotia said. “We assume global market conditions will remain healthy, as favorable farm economics allow farmers to continue to invest in new more productive equipment and technology upgrades.

“While improving, we expect supply chain pressures will persist, presenting challenges throughout the year.”