AGCO Expects More Income Strain

AGCO Corporation on Dec. 19 updated its financial targets to reflect a soft equipment market, during its 2024 Analyst Day, live from Manhattan, New York.

Some highlights from the day were the following:

-- Expand net sales of Fendt in North and South America to $1.7 billion by 2029. Sales are estimated to be $1 billion in 2024.

-- Grow AGCO's highly profitable parts business to $2.3 billion by 2029 from an estimated $1.8 billion today. In the parts category, AGCO is also looking to increase net sales by way of eCommerce, from $130 million in 2023 to $575 million by 2029.

-- With the formation of its self-described precision ag engine, PTx nine months ago (PTx Trimble and Precision Planting), AGCO is laying down an ambitious goal for technology sales -- setting out to earn an estimated $2 billion in net sales by 2029, compared to $0.9 billion this year.

-- AGCO also released its first 2025 outlook. AGCO's net sales for 2025 are expected to be approximately $9.6 billion. That is compared to a projected $12 billion in sales this year and $14.4 billion in 2023, at that time AGCO's best-ever annual result since the manufacturer was formed in 1990.

AGCO Chairman, President and CEO Eric Hansotia recalled AGCO's last live meeting with analysts two years ago. "Wow, has a lot changed in (these) two years," Hansotia began. "Two years ago ... we were talking about a market that was red-hot and smoking. We were building everything that we could. Now we have a much softer market."

A down cycle is not difficult to predict or unusual, Hansotia said. "What is unusual is how AGCO is addressing this cycle. We are way more proactive, way more aggressive on taking costs out, taking inventory out."

Hansotia was positive about AGCO's future. AGCO believes, he said, that its Fendt brand will become a strong income generator. Once a European tractor business, Fendt has become a full-season competitor in the ag machinery world with a full line of tractors, Momentum planter, IDEAL combine and Rogator sprayer, plus a line of hay and forage equipment.

It will be a global effort. "We had to take that full portfolio and bring it to the global market, mainly North and South America, but also to Australia, New Zealand and South Africa," Hansotia said.

AGCO also discussed its new PTx technology arm, during its presentation to analysts.

"PTx is the precision ag engine within AGCO," said Seth Crawford, PTx senior vice president and general manager. AGCO's precision ag solutions feed AGCO's multi-brand retrofit strategy represented by the components it sells through 100 OEMs.

AGCO/PTx currently launches three to five new retrofit products each year. "You don't have to buy a million machines. You can buy $20,000 worth of components and enhance your output this year," Crawford said.

"AGCO is the only company that can effectively retrofit almost any make or model of equipment with Precision Planting and PTx Trimble technology that will lead to higher yields with fewer inputs for farmers," Crawford added. "Our retrofit-first mindset is increasing our total addressable market and accelerating technology adoption, resulting in more profitable farmers."

Dan Miller can be reached at dan.miller@dtn.com

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