AGCO, a global leader in the design, manufacture, and distribution of agricultural machinery and precision ag technology, reported net sales of $3.2 billion for the second quarter ended June 30, 2024. This represents a 15.1% decrease compared to the second quarter of 2023. The reported net loss for Q2 2024 was $(4.92) per share, which includes the estimated loss on the Grain & Protein business held for sale. The adjusted net income was $2.53 per share, compared to the reported net income of $4.26 per share and adjusted net income of $4.29 per share for the second quarter of 2023. Excluding an unfavorable foreign currency translation of 0.9%, net sales for Q2 2024 decreased by 14.2% compared to Q2 2023.
For the first six months of 2024, net sales were approximately $6.2 billion, a decrease of 13.7% compared to 2023. The reported net loss for this period was $(2.67) per share, including the estimated loss on the Grain & Protein business held for sale, with adjusted net income at $4.85 per share. These figures compare to a reported net income of $7.36 per share and adjusted net income of $7.80 per share for the same period in 2023. Currency translation impacts were flat for the first half of 2024 compared to the same period in 2023.
“While we continue to successfully execute our Farmer-first strategy, second-quarter results were influenced by weakening market conditions and significant production cuts aimed at reducing our Company and dealer inventories,” said Eric Hansotia, AGCO’s Chairman, President, and Chief Executive Officer. “Declines in commodity prices and lower projected farm income in 2024 have negatively affected farmer sentiment, further dampening global industry demand. Given the current environment, we are taking aggressive actions, including our recently announced restructuring program, to control expenses, reduce production levels, and lower investments in working capital. We are balancing these near-term cost reductions with continued investment in our longer-term high-margin growth initiatives that will help deliver more sustainable results through the economic cycles.”
“On July 25, we announced an agreement to divest the Grain & Protein business,” Hansotia continued. “The divestiture of this business supports our strategic transformation, recently accelerated by the PTx Trimble joint venture. Divesting allows us to streamline and sharpen our focus on AGCO’s portfolio of award-winning agricultural machinery and precision ag technology products. Going forward, we will be better positioned for long-term growth in our higher-margin and higher free cash flow-generating businesses. Simultaneously, it will raise our profitability through the cycle as Grain & Protein has historically been a below-average margin business.”
Crop production forecasts predict healthy harvests across most major agricultural production regions,” Hansotia added. “Commodity prices have trended down as we’ve moved through the planting season and into summer, further pressuring farm income. We continue to expect increased adoption of precision technology, but more challenging farm economics are resulting in weaker global industry demand across most equipment categories. In the first half of 2024, retail tractor industry demand fell by an average of 8% across the three major regions.”
North American industry retail tractor sales decreased 8% during the first six months of 2024 compared to the same period in 2023. Sales declines in smaller equipment were more significant than those in larger equipment categories. Combine unit sales were down 11% in the first half of 2024 compared to the same period in 2023. Lower projected farm income and a refreshed fleet are expected to continue to pressure industry demand for the remainder of 2024, resulting in weaker North American industry sales compared to 2023.
South American industry retail tractor sales decreased 14% during the first six months of 2024 compared to the same period in 2023. Strong declines were consistent across Brazil, Argentina, and the smaller South American markets. Demand in Brazil was negatively affected by the floods in Rio Grande do Sul and continued funding shortfalls of the government-subsidized loan program, coupled with a challenging first harvest in the Cerrado region. Following three strong years, retail demand in South America is expected to further soften in 2024 due to lower commodity prices and farm income.
In Western Europe, industry retail tractor sales decreased 5% during the first six months of 2024 compared to the same period in 2023, with the weakest conditions in Italy, the United Kingdom, and Scandinavia. Industry demand is expected to soften for the remainder of 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.
