AGCO: Focus is on ‘increasing margins’ – not world politics

In a recent US interview with CNBC’s Jim Cramer, AGCO’s CEO, president and chairman – Martin Richenhagen – said the agricultural equipment manufacturer’s focus is on how to increase margins and not necessarily on what’s happening in the world right now.

He outlined (margin) targets of 8% for the current year and 10% for 2020.

He said: “We’re focused on improvement initiatives [that] already started last year, because we want to be independent from everything that is going on in a more volatile political environment. I think we are doing fine.”

Richenhagen added: “Being a global organisation has significant benefits that are currently paying off. When you spread your business all over the world, you don’t depend so much on one single market.”

According to US-based publisher Ag Equipment Intelligence, AGCO’s operating margin improved (on a year-on-year basis) in the first quarter of this year.

In the same period, AGCO’s regional sales showed gains in Europe and the Middle East. However, North American sales were down. South American sales fell significantly; as did those in the Asia/Pacific/Africa regions.

World tractor sales

In other tractor/machinery news, data presented recently by FederUnacoma (Italian Agricultural Machinery Manufacturers Federation) indicates a decline in sales of new tractors (of all makes/brands) last year in Europe, China and Turkey, and growth in the US and India.

The organisation says that the European agricultural machinery market closed 2018 with a decline; the prospects for 2019 “do not seem positive”. In particular, sales of new tractors across Europe fell by 10% last year. Approximately 177,300 units were registered.

The US closed 2018 with a “significant increase in new tractor registrations”. Circa 235,000 units were registered – an increase of 7%.

China registered a sharp slowdown in sales in 2018 (-26%), as part of a “policy to reduce excess production capacity undertaken by the country”.

India, by contrast, reached a record level of 800,000 units sold during 2018. That’s according to estimates from the TMA manufacturers’ association.

Brazil showed a positive result – 39,000 tractors were registered (an increase of 5% compared to the previous year). In Russia, 23,300 tractors were sold (an increase of 3% compared to the previous year).