DOW JONES NEWSWIRES
Agco Corp.'s (AGCO) third-quarter profit surged as the seller of
heavy farm machinery reported sales growth in all four of its
geographic regions, led by robust demand in South America, where
Agco said it outperformed the market.
The company also raised its 2010 earnings target to $2.10 to
$2.20 a share from $1.85 to $2 a share as it affirmed its revenue
target.
Agco, whose brands include Massey Ferguson and Challenger, had
seen sales lag in both North America and Europe, although stronger
sales in South America, particularly in Brazil and Argentina,
helped revenue in recent quarters. Agco has said it intends to
focus on cost control, margin improvement and working-capital
management during the second half of the year.
Caterpillar Inc. (CAT), which makes similar products to Agco in
addition to machines used in construction, said last week its
third-quarter profit surged 96% as machinery sales jumped sharply
from last year's moribund level, helping the company post results
that easily topped Wall Street's expectations.
On Tuesday, Agco posted a profit of $62.3 million, or 65 cents a
share, up from $11.1 million, or 12 cents a share, a year earlier.
Excluding restructuring and other impacts, earnings surged to 66
cents a share from 13 cents a share.
The company in July forecast earnings of 40 cents to 45 cents a
share, a view that missed Wall Street's then-estimates, although
analysts polled by Thomson Reuters most recently foresaw earnings
of 49 cents a share.
Revenue jumped 19% to $1.66 billion, above the $1.63 billion
average prediction of analysts. Sales slid 33% a year ago.
Gross margin widened to 18.3% from 17.5%.
Revenue in Europe, Africa and the Middle East, the company's
biggest region for sales, increased 2.6%. They jumped 28% in North
America and 47% in South America.
Chairman and Chief Executive Martin Richenhagen earlier this
month said global demand for farm commodities will likely remain
strong for the next several years, fueling a prolonged run of
elevated sales of tractors and harvesting combines. Agco is the
world's third largest manufacturer of farm tractors, behind Deere
& Co. (DE) and CNH Global NV (CNH, NHL.XE).
Shares fell 3 cents to $43.80 in premarket trading. The stock is
up 36% this year.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com