UPDATE: Agco Q2 Profit Rises 9.6% On South American Sales Surge
27 Luglio 2010 - 11:00PM
Dow Jones News
Agco Corp.'s (AGCO) second-quarter earnings rose 9.6%, as the
company's market-leading sales of farm tractors in South America
offset lower sales in Europe and the U.S.
Agco easily exceeded its own and Wall Street's earnings
expectations for the quarter, sending the company's stock up
Tuesday 1.46%, or 49 cents, to close at $34.11 a share.
Agco's sales in South America rose by 98% from a year ago to
$448 million. The company's performance in the region benefited
from a combination of large harvests, government-sponsored
financing for equipment purchases and favorable currency
translations.
"Our strong market position in South America is allowing us to
take advantage of robust market conditions," said Martin
Richenhagen, chairman and chief executive, during a conference call
Tuesday with Wall Street analysts. "South America was the key to
our results in the second quarter."
Agco, whose brands include Massey Ferguson, Challenger and
Fendt, said it now sees industry-wide sales of farm equipment in
South American increasing 20% to 25% this year over 2009, up from
the company's April forecast of a 10% to 15% increase.
Conversely, the Duluth, Ga., company offered a gloomier outlook
for Europe, predicting that industry-wide machinery sales would
fall by 10% to 15%, compared with its earlier forecast of a 10%
decrease.
Bulging inventories of equipment at dealers in Western Europe
and weak markets for livestock and dairy products contributed to
16% decline in Agco's second-quarter sales in the Europe.
In the U.S., expectations for strong harvests and improving farm
incomes are driving sales of large farm tractors. But sluggish
demand for smaller tractors by dairy, livestock and hay producers
caused Agco's North American sales to fall 17% in the second
quarter.
Agco, the world's third-largest farm-machinery manufacturer
behind Deere & Co. (DE) and CNH Global N.V., expects
industry-wide equipment sales in the U.S. to increase 5% this year,
slightly better than its April forecast.
Agco raised its 2010 earnings outlook to a range of $1.85 to $2
a share from $1.65 to $1.75 as it affirmed its revenue forecast of
$6.7 billion to $6.8 billion. For the second quarter, Agco reported
net profit of $62.9 million, or 66 cents a share, up from $57.4
million, or 61 cents a share, a year earlier, which included 3
cents of charges. The company in April had forecast earnings of 40
cents to 45 cents.
Revenue slipped 1.4% to $1.74 billion.
Analysts polled by Thomson Reuters forecast income of 46 cents a
share from revenue of $1.68 billion.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
(Nathan Becker contributed to this report)
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