AGCO reported net sales of $2.9 billion for the first quarter ended March 31, a decrease of 12.1% compared to the first quarter of 2023. Excluding favorable foreign currency translation of 1.0%, net sales in the first quarter of 2024 decreased 13.1% compared to the first quarter of 2023.
“Our results reflect the declining global demand for the agricultural equipment industry, and as anticipated, correspondingly significant production cuts that still led to solid results, said Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer. “The reductions were aimed at helping reduce dealer inventories. While cost and working capital management remain a priority to mitigate market pressures, we continue to reward shareholders through dividends and investing in our three margin-rich initiatives: growing our precision ag business, globalizing a full-line of our Fendt branded products and expanding our parts and service business.”
Historical averages
“Planting activities are under way in the northern hemisphere and healthy yields would result in increases to grain inventories,” said Hansotia. “Farm income levels are expected to further moderate in 2024, aligning more closely to historical averages following three prosperous years. We continue to expect increased adoption of precision technology, but more challenging farm economics are resulting in weaker global industry demand across most equipment categories. In the first quarter of 2024, retail tractor industry demand fell by an average of 10% across the three major regions.”
North American industry retail tractor sales decreased 9% during the first three months of 2024 compared to the first three months of 2023. Sales declines in smaller equipment were more significant than most of the larger equipment categories. Combine unit sales were down 17% in the first quarter. Lower projected farm income and a refreshed fleet are expected to pressure industry demand in 2024, resulting in weaker North American industry sales compared to 2023.
South American industry retail tractor sales decreased 18% during the first three months of 2024 compared to the first three months of 2023. Brazil and the smaller South American markets showed the most weakness, while declines in Argentina were moderate after weak industry sales in 2023. Following three strong years, retail demand in South America is expected to further soften in 2024 as a result of lower commodity prices and farm income.
In Western Europe, industry retail tractor sales decreased 8% during the first three months of 2024 compared to the first three months of 2023 with the weakest conditions in Italy, Finland and the United Kingdom. Farmer sentiment in the region has continued to be negatively impacted by the conflict in Ukraine and high input cost inflation. Industry demand is expected to soften in 2024 as lower income levels pressure demand from arable farmers, while healthy demand from dairy and livestock producers is expected to mitigate some of the decline.
CNH Industrial reported net income of $402 million compared with net income of $486 million for the three months ended March 31, 2023. Consolidated revenues were $4.82 billion (down approximately 10% compared to Q1 2023) and Net sales of Industrial Activities were $4.13 billion (down approximately 14% compared to Q1 2023).
“The CNH team navigated a declining market environment in the first quarter, as lower industry demand persisted especially in South America and Europe”, said Scott W. Wine, Chief Executive Officer. “Anticipating these headwinds, we are continuing to improve what we can control – production efficiency, disciplined commercial execution, judicious SG&A reductions, and thoughtful product and technology investments.”
Net sales of Industrial Activities were $4.13 billion, a decrease of 14% when compared to the corresponding period from the previous year. This decline is mainly due to lower industry demand and dealer inventory management. Price realization continued to be favorable for Agriculture and essentially flat for Construction.
In Q1 2024, Net income was $402 million. In comparison, in Q1 2023, adjusted net income was $475 million. Gross profit margin of Industrial Activities was 22.7% (24.4% in Q1 2023). The decrease was driven by the Agriculture segment, whose margin was impacted by lower production volumes only partially compensated by price realization and production cost efficiencies.
