AGCO Shares Drop As Q3 Results Miss Expectations, 2024 Outlook Cut Amid Softened Global Demand

AGCO Corp (NYSE:AGCO) shares slipped after the company reported worse-than-expected third-quarter results and lowered its 2024 outlook.

AGCO reported a third-quarter net sales decline of 24.8% year over year to $2.599 billion, missing the consensus of $2.90 billion.

Regional Sales: South America -47% YoY, Europe/Middle East -18.2% YoY, North America -21.8% YoY, and Asia/Pacific/Africa -11.7% YoY.

Adjusted operating income slid 67% year over year to $143.8 million, and the margin contracted by 710 bps to 5.5%. The gross profit declined 35.4% year-over-year to $603.1 million, and the margin declined 383 bps to 23.2%.

The company reported regional operating margin performance with EME at 6.4%, North America at 7.2%, South America at 11.8%, and APA at 3.8%.

Adjusted EPS of $0.68, down from $3.97 a year ago, missing the consensus of $1.08.

AGCO’s cash used in operating activities for the nine months ended September was $108 million, down from cash provided of $202.7 million a year ago. As of September 30, cash and equivalents stood at $642.6 million.

“We continue to execute against our Farmer-First strategy focused on enhancing profitability through the cycle with our three high-margin initiatives, recent portfolio moves and aggressive actions to control expenses including our ongoing restructuring program,” said Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer.

“The reaffirmation of our full-year adjusted operating margin outlook of 9% underscores this transformation, especially considering the significant market downturn in the third quarter. Low commodity prices and high input costs led to increased conservatism from our dealers and farmers resulting in ongoing production cuts to help reduce AGCO and dealer inventories.”

The company’s regular quarterly dividend of $0.29 per common share will be paid on December 16 to all stockholders of record as of the close of business on November 15.

2024 Outlook, lowered: The agricultural machinery maker now expects net sales of $12 billion (prior $12.5 billion) versus the $12.445 billion consensus, reflecting lower sales volumes.

AGCO now expects adjusted EPS of ~$7.50 (prior $8.00) versus the consensus of $7.93. The company reaffirms its adjusted operating margin expectation of ~9%.

Price Action: AGCO shares are trading lower by 10.4% at $87.66 at the last check Tuesday.