Farmer-First Strategy Delivering Value for
Farmers and Generating Higher Through-the-Cycle Returns for
Shareholders
NEW
YORK, Dec. 19, 2024 /PRNewswire/ -- AGCO
Corporation (NYSE: AGCO), a global leader in the design,
manufacture and distribution of agricultural machinery and
precision ag technology, announced new financial targets to
investors at its 2024 Analyst Meeting as it remains focused on
driving enhanced durability and profitability through the
cycle.
By 2029, AGCO is targeting to:
- Improve adjusted mid-cycle adjusted operating margins to
14%-15%1
- Outgrow the industry by 4%-5% annually
- Annually deliver free cash flow conversion of
75%-100%2
- Expand net sales of Fendt in North and South America to $1.7
billion as the company continues to roll out a full line of
Fendt products
- Grow parts net sales to $2.3
billion while increasing market share of genuine AGCO
parts
- Deliver precision ag net sales of $2.0 billion
"Our Farmer-First strategy has served us well since its launch
in 2021, driving us to deliver even more innovative solutions for
farmers through our differentiated portfolio of leading brands,"
said Eric Hansotia, AGCO's Chairman,
President and Chief Executive Officer. "We are achieving
higher highs and higher lows through the cycle, reinforcing our
commitment to creating a more resilient business focused on
high-margin opportunities and positioning us for sustainable and
profitable growth."
Improving Farmer Outcomes with Technology
AGCO is
outpacing the industry with its innovative suite of precision ag
solutions to help farmers drive results and increase productivity.
Seth Crawford, Senior Vice President
and General Manager of AGCO's newest leading brand, PTx,
highlighted the company's journey to become the global industry
leader in mixed fleet smart farming and autonomy
solutions.
"AGCO is the only company that can effectively retrofit almost
any make or model of equipment with Precision Planting and PTx
Trimble technology that will lead to higher yields with fewer
inputs for farmers," said Crawford. "Our retrofit-first mindset is
increasing our total addressable market and accelerating technology
adoption, resulting in more profitable farmers."
The growth of the PTx portfolio is centered on:
- Innovating faster and better than competitors with 3-5 new
products launched each year, accelerating sprayer portfolio
rollout, executing Connected Cloud strategy and globalizing
the product portfolio
- Growing distribution by increasing full-line technology
dealers, engaging new original equipment manufacturers (OEM) and
increasing portfolio offerings to OEMs, including AGCO's
leading brands of Fendt, Massey
Ferguson and Valtra
The company also provided an update on its PTx data platform,
which is critical to helping farmers manage operations across the
mixed fleet. The first platform offering is expected to be
available in 2025, with the full platform rollout expected in
2027.
AGCO is taking its PTx portfolio to farmers in a unique way
through specialized and differentiated precision ag retrofit
dealers as well as factory fit options for OEMs and leading AGCO
brands.
"Our machine and technology offerings are further enhanced by
FarmerCore, a new distribution model in North and South
America taking the business from brick-and-mortar stores
to the farm, which is where and how farmers want to be served,"
said Hansotia.
2025 Outlook
AGCO's net sales for 2025 are expected to
be approximately $9.6 billion as
market share gains are more than offset by softening demand and
ongoing dealer inventory destocking. Adjusted operating margin is
projected to range between 7.0%-7.5%3, reflecting the
impact of lower sales and lower production volumes. Based on these
assumptions, 2025 adjusted earnings per share are targeted at
approximately $4.00-$4.50.4
Access all materials from the 2025 Analyst Meeting on AGCO's
website at www.AGCOcorp.com under the "Investors" Section.
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and
distribution of agricultural machinery and precision ag technology.
AGCO delivers value to farmers and OEM customers through its
differentiated brand portfolio, including leading brands
Fendt®, Massey
Ferguson®, PTx and Valtra®. AGCO's
full line of equipment, smart farming solutions and services helps
farmers sustainably feed our world. Founded in 1990 and
headquartered in Duluth, Georgia,
USA, AGCO had net sales of approximately $14.4 billion in 2023. For more
information, visit www.AGCOcorp.com.
Cautionary Statements Regarding Forward-Looking
Information
Forward-looking statements in this presentation,
including statements about our strategic plans and initiatives as
well as their financial impacts, demand, product development and
capital expenditure plans and timing of those plans and our
expectations with respect to the costs and benefits of those plans
and timing of those benefits, future revenue, crop production and
farm income, production levels, price levels, margins, earnings,
operating income, cash flow, engineering expense, tax rates, and
other financial metrics, as well as our expectations regarding the
PTx Trimble businesses, are subject to risks that could cause
actual results to differ materially from those suggested by the
statements. These risks include, but are not limited to, adverse
developments in the agricultural industry, including those
resulting from any, supply chain disruption, inflation, weather,
commodity prices, changes in product demand, interruptions in
supply of parts and products, the possible failure by us to develop
new and improved products on time, including premium technology and
smart farming solutions, within budget and with the expected
performance and price benefits, difficulties in integrating the PTx
Trimble businesses in a manner that produces the expected financial
results, reactions by customers and competitors to the transaction,
including the rate at which PTx Trimble's largest OEM customer
reduces purchases of PTx Trimble equipment and the rate of
replacement of those sales, introduction of new or improved
products by our competitors and reductions in pricing by them, the
war in the Ukraine, difficulties
in integrating acquired businesses and in completing expansion and
modernization plans on time and in a manner that produces the
expected financial results, and adverse changes in the financial
and foreign exchange markets. Actual results could differ
materially from those suggested in these statements. Further
information concerning these and other risks is included in AGCO's
filings with the SEC, including its Form 10-K for the year ended
December 31, 2023, and subsequent
Form 10-Q filings. AGCO disclaims any obligation to update any
forward-looking statements except as required by law.
1 Adjusted operating margins are adjusted to
midcycle based on a comparison of the current agricultural
equipment industry sales to the industry's 10-year historical
average. If industry sales are above the 10-year average, margins
are normalized down to midcycle using a best-fit line equation.
Conversely, in years with sales below the 10-year average, margins
are normalized up to midcycle using the same equation. This
approach aims to align operating margins with historical patterns,
considering the cyclicality of the industry.
2 Free Cash Flow is a non-GAAP measure and is
defined as net cash (used in) provided by operating activities less
purchases of property, plant and equipment. Free Cash Flow
Conversion is a non-GAAP measure defined as (Cash Flow from
Operations less purchases of property, plant and equipment) /
Adjusted Net Income.
3 Adjusted operating margin is defined as the
ratio of adjusted income from operations divided by net sales.
4 AGCO does not provide quantitative
reconciliation of forward-looking, non-GAAP financial measures to
the most directly comparable GAAP financial measure because it is
difficult to reliably predict or estimate the relevant components
without unreasonable effort due to future uncertainties that may
potentially have a significant impact on such calculations and
providing them may imply a degree of precision that would be
confusing or potentially misleading.
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SOURCE AGCO Corporation