If the past few years of the farm equipment industry were an amusement park ride, it wouldn't be a monster roller coast. The ups and downs aren't that severe. Granted, the ups during the recent commodity price boom were pretty high. The downs -- now that prices have moderated -- are not so low. Let's call this amusement park ride the kiddie roller coaster.
Here's what AGCO reported after the first quarter: Sales in North America were up 5%; sales in EAME (Europe, Africa and Middle East) were up 1%; sales in South America were down 9%; and sales in APAC (Asia, Pacific) were down 17%.
Not terrible numbers and not much different from global competitors.
CNH, for example, reported first quarter agricultural sales dropped 6% from 2013 to 2014.
John Deere, which has released its second quarter results, reported net sales and revenue for its worldwide Agriculture and Turf division were down 12% when comparing second quarter 2014 to 2013.
Dow Jones speculates that less favorable federal tax breaks have influenced the downward trend in ag machinery sales. It reported overall sales of farm tractors slipped 3% in May 2014 compared to May 2013; sales of high-horsepower,
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2WD tractor models fell 16%, and sales of 4WD tractors dropped 14%. North American sales of combines were off 24% total, largely because of a 51% drop in sales in Canada.
Farm equipment exports also have declined this year, according to the Association of Equipment Manufacturers (AEM). The first quarter of 2014 compared to the first quarter of 2013 saw a sharp drop of 28%.
Here is how AEM broke it down:
-- Exports to Canada declined 30.7 percent, for a total $698.3 million.
-- Exports to South America declined 14 percent, for a total $240.3 million.
-- Exports to Asia decreased 36.7 percent, for a total $145.6 million.
-- Exports to Europe dropped 34 percent, for a total $628.1 million.
-- Exports to Central America decreased 17 percent, for a total $256.8 million.
-- Exports to Australia/Oceania declined 14.8 percent to $144 million.
-- Exports to Africa decreased 23.5 percent to $71.5 million.
There is no way to put a good spin on numbers like that.
Yet investors haven't spooked. From October 2013 to June 2014, CNH stock dropped from about $13/share to about $11. John Deere stock actually rose from about $83 to $93. AGCO dropped from about $65 to about $56. Of course, CNH and Deere have non-agricultural components, which can skew investment one way or another.
The big picture seems to be that farm equipment companies, like farmers, have seen revenues slide. But there is no freefall. No one holding is their hands over their heads and screaming.
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