AGCO - the parent company of Fendt, Valtra and the Massey Ferguson brands - has released its financial performance figures for 2023.

Turnover for the 2023 financial year still grew despite the fact its $3.8bn turnover figure for final quarter yielded 2.5% below the same period in 2022.

According to AGCO, this figure for Q4 was in fact 4.3% before favourable currency exchange rates.

Net sales for the full year of 2023 were approximately $14.4bn, which is an increase of 13.9% compared with 2022. Excluding favourable currency translation impacts of 0.1%, net sales for the full year of 2023 increased 13.8% compared with 2022.

While unit sales in some regions were down, price adjustments and the growing demand for higher horsepower tractors and machinery, as well as replacement parts, are the major causes of growth in all markets.

Europe/Middle East

Europe and the Middle East recorded 3.3% growth for the final quarter of 2023.

Net sales in the region increased 17.3% for the full year of 2023 compared with 2022, excluding negative currency exchange impacts. Healthy growth across the major European markets contributed to the improvement.

North America

In North America, AGCO’s turnover increased 8.3% for Q4. This, combined with a strong first three quarters, contributed to AGCO’s annual net sales increase.

The North American market alone recorded an 18% increase in sales compared with 2022. Aside from the factors mentioned above, the increase in combine sales helped the significant increase in sales.

South America recorded a 38.9% decrease in turnover for the fourth quarter compared with 2022. Meanwhile, net sales in the region increased 2.6% for the full year of 2023 compared with 2022, despite the fourth quarter declines.

Asia, the Pacific and Africa

Asia, the Pacific and Africa witnessed Q4 sales increases of 11.3% compared with 2022.

Net sales for the region were approximately flat, excluding the negative impact of currency exchange during the full year of 2023 compared with 2022 due to the pricing offset by lower tractor and combine sales volumes.

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Higher sales in Australia were mostly offset by lower sales in Japan. Income from operations decreased $39.6m for the full year of 2023 compared with 2022 due to higher material and labour costs and higher selling general and administrative (SG&A) expenses.

Tractors and combines

When compared with 2022, tractor unit sales for 2023 in North America, South America and western Europe were down 3%, 8% and 4% respectively.

Combine sales in North America and western Europe increased equally by 2%. Meanwhile, combine sales in South America decreased by 17%. Each of these respective markets are all forecast to further soften during 2024, according to AGCO.

Outlook

AGCO’s net sales for 2024 are expected to be approximately $13.6bn, reflecting lower sales volumes, modest pricing adjustments, as well as favourable foreign currency translation.

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Operating margins are projected to be approximately 11%, reflecting the impact of lower sales, lower production volumes and relatively flat investments in engineering and other technology efforts to support AGCO’s precision agriculture and digital initiatives.

Regarding machinery price increases, AGCO made the following comment: “We recently have experienced significant inflation in a range of costs, including for parts and components, shipping and energy.

"While we have been able to pass along most of those costs through increased prices, there can be no assurance that we will be able to continue to do so. If we are not, it will adversely impact our performance.”

AGCO’s chair, president and chief executive officer Eric Hansotia explained: “We continued to increase our technology development efforts with engineering expense up over 23% in 2023 compared to 2022 and up over 60% compared to 2020.

"These levels of higher investments are producing increased technology patents for AGCO, award-winning value-enhancing products for our farmers and record financial results for our shareholders.

“For 2024, we will remain focused on our primary growth initiatives, as well as driving further operational efficiencies. We expect these efforts to mitigate some of the softening industry demand.

"More challenging global market conditions are expected in 2024 due to reduced commodity prices and modestly lower farm income expectations.

"Despite a lower sales forecast, we expect higher and more resilient margins compared to past cycles due to structural improvements in our business.”