AGCO Corp AGCO shares are trading higher after the company reported first-quarter results and reaffirmed its 2025 outlook.
The company reported a 30% year-over-year (Y/Y) decline in fourth-quarter net sales to $2.05 billion, which is in line with the consensus.
Gross margin contracted by 90 bps Y/Y to 25.4%. Adjusted operating income slid 66.7% Y/Y to $83.4 million, and the margin contracted by 550 bps Y/Y to 4.1%.
Regional Sales: South America (-15.8% Y/Y), Europe/Middle East (-22.1% Y/Y), North America (-34.2% Y/Y) and Asia/Pacific/Africa (-36.0% Y/Y).
The company reported regional operating margin performance with EME at 11.6%, North America at (5.0%), South America at 0.9% and APA at (2.9%).
Adjusted EPS of $0.41, down from $2.32 a year ago, beating the consensus of $0.09.
AGCO’s cash used in operating activities totaled $212.2 million, compared to $370.0 million a year ago. As of March 31, cash and equivalents stood at $562.6 million.
“The underlying fundamentals in many parts of the world have begun to trend upward with farmer sentiment in Europe improving, U.S. corn prices rising and corn stocks-to-use-ratios at lower levels. However, the global agricultural equipment market is volatile due to tariffs and shifting export demand for grain,” said Eric Hansotia, AGCO’s chairman, president and CEO.
2025 Outlook reaffirmed: AGCO continues to expect adj. EPS of $4.00-$4.50 versus the consensus of $3.88 and net sales of around ~$9.6 billion versus the consensus of $9.5 billion.
The net sales outlook reflects lower sales volumes and actions to mitigate the tariff impact.
The company expects adjusted operating margins to be approximately 7% – 7.5%, reflecting the impact of lower sales, lower production volumes, increased cost controls and flattish investments in engineering.
“As we look around the world, the U.S. may face reduced market access for key exports, while South America is likely to ship more to China. Although U.S. net farm income forecasts have been revised higher on government aid, increased subsidies are not expected to boost demand for farm equipment in the near-term,” Hansotia said.
”Brazil’s record soybean production and delayed corn planting highlight both growth potential and risks. Persistent rain and poor growing conditions have negatively impacted wheat production across Western Europe with reduced yields reported in several countries. Demand for new equipment has softened further in North America and Europe as a result of volatile crop producer demand.”
Investors can gain exposure to the stock via Global X AgTech & Food Innovation ETF KROP and Cohen & Steers ETF Trust Cohen & Steers Natural Resources Active ETF CSNR.
Price Action: AGCO shares are up 10.6% at $93.78 at the last check Thursday.
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