Two of the three major agricultural machinery manufacturers in the west have recently published their results for the last quarter of 2021, allowing a full view of how they fared over the year.

Case New Holland Industrial

In a word, they have done very well indeed. CNH Industrial posted net sales of $31.6 billion (€27.5 billion), of which agriculture accounted for just under half at $14.7 billion (€12.8 billion), a figure which drove up the overall results for the corporation.

Although this robust increase of 46% over last year for farm machinery may, at first, be be considered a rebound from a depressed market, there was very little difference between the years 2019 and 2020.

Overall, the company increased earnings by 30%, so there are obviously additional factors supporting the increased demand for tractors that are not influencing the sales of its other products to the same extent.

As the old saying goes, income is vanity, profit is sanity and here the earnings before interest and tax (EBIT) amounted to €1.6 billion in 2021.

Sales of all tractors in Europe were up 16% and combines 17%. Unfortunately this is not directly comparable to the U.S where the figures are split between units of above or below 140hp, which were 23% and 10% respectively.

AGCO shares a good 2021

AGCO has also released its results for the final quarter which show an increase in net sales of 21% over 2020.

AGCO results q3
AGCO Tractor sales were up 16% over 2020

Tactor sales for western Europe were precisely in line with CNH, showing a boost of 16%. However, combine sales showed only a 3% rise which, in the context of the year as a whole, must be considered disappointing.

The adjusted operating margin is reported as being 9.1% which was ahead of expectations.

AGCO's chairman, Eric Hansotia, summed up what he believes are the reasons for the welcome results:

“Elevated soft commodity prices are supporting improved farm income in 2021 despite significantly higher farm input costs. These favourable farm fundamentals are resulting in robust demand for agricultural equipment as farmers look to upgrade their fleets.”

Commodity prices are set to remain favourable for 2022 with wheat now trading at $7.90 per bushel or €256/t, having slipped back from its pre-Christmas peak.

With a slight reduction in yield of around 2.5% expected from this years harvest, that may well rise, although there could be less to sell.

The affect of component shortage is also a great unknown for 2022, sales may well be depressed due to the unavailability of finished machines, a situation exacerbated last year by the extra demand.