AGCO AGCO Corp

Agco Corp.'s (AGCO) fourth-quarter profit more than doubled, but the company expects no more than a modest increase in worldwide demand for farm machinery this year.

Agco forecast this year's earnings will be $2.50 to $2.75 per share on $7.6 billion to $7.9 billion in sales. Analysts expect the company to earn $2.94 a share from $7.45 billion in sales.

Agco's stock was down 0.52% at $53.18 a share.

Despite rising prices for farm commodities, the company said it anticipates worldwide farm machinery demand to be flat or increase just modestly this year from 2010. Rival Deere & Co. (DE) offered a similarly cautious prediction in November.

In South America, where Agco is the market leader in tractors, the company sees equipment demand softening as the Brazilian government scales back some of the loan assistance offered to farmers in recent years to purchase equipment. Fourth-quarter sales from South America rose 2.6% from a year earlier.

Meanwhile, in North America, Agco expects flat demand for machinery coming off high sales levels in 2010. Agco sees modest improvement in demand in western Europe as farmers there benefit from rising prices for grain and dairy products.

Agco, the third largest farm machinery manufacturer behind Deere and CNH Global NV (CNH), reported that sales accelerated at the end of 2010, particularly in Europe and North America.

Fourth-quarter sales in Europe, the Middle East and Africa, which account for the largest share of Agco's sales, rose 20%. North America sales surged 49%.

Agco, whose brands include Massey Ferguson and Challenger, reported a profit of $85.2 million, or 87 cents a share, up from $33.5 million, or 35 cents a share, a year earlier. Excluding items such as restructuring charges, earnings rose to 88 cents from 42 cents. Net sales climbed 19% to $2.17 billion and were up 23% excluding currency translation.

Analysts polled by Thomson Reuters anticipated earnings of 76 cents on $2.03 billion in sales.

Gross margin jumped to 18.9% from 14.6% on higher production and improved sales of higher-priced machinery. But the company warned that gross margin improvement in 2011 would likely be offset by rising expenses for growth initiatives and new product launches.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

--Matt Jarzemsky contributed to this article

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