) reported first quarter 2012 earnings of $1.21 per share, which
exceeded the Zacks Consensus Estimate of 86 cents as well as the
year-ago quarter's earnings of 81 cents.
Total revenue increased 26.5% year over year to $2.27 billion,
beating the Zacks Consensus Estimate of $2.08 billion. Total
revenue included an unfavorable currency translation impact of
4.3%, excluding which total revenue soared 30.8% in the quarter.
The growth was mainly driven by an increase in sales across all the
regions, particularly in Western and Eastern Europe and the
acquisition of GSI.
The North American region reported a 57.6% improvement in sales
to $566.5 million while in South America sales improved 1.2% to
$415.4 million. In the EAME region sales improved 23.3% to $1,199.8
million, whereas Asia / Pacific region experienced a 67.9%
improvement amounting to $92 million.
Cost and Margins
Cost of goods sold increased 23.5% to $1.78 billion in the
quarter. Gross profit also rose 38.5% to $493 million.
Consequently, gross margin jumped 190 basis-points (bps) to
Selling, general and administrative expenses increased 29.3% to
$238.9 million in the quarter. Adjusted operating income increased
56.2% to $169.8 million. Operating margin soared 150 bps to
Cash and cash equivalents were $426.7 million as of March 31,
2012, compared to $724.4 million as of December 31, 2011. Long-term
debt excluding current portion amounted to $1,331.1 million as of
March 31, 2012, compared to $1,409.7 million as of December 31,
2011. Debt-to-capitalization ratio improved to 30.5% as of March
31, 2012, compared to 32.9% as of December 31, 2011.
Outlook for 2012
The company expects adjusted earnings of $5.50 per share for the
year, up from the prior guidance of $5.00 per share. It has also
upgraded its revenue estimates in the range of $10.2-$10.5 billion
from the previous guidance of $10.0 billion. AGCO expects its
worldwide industry sales for 2012 to grow reasonably compared to
the previous year. Further, it expects growth in Western and
Eastern Europe. It looks forward to strong market conditions in
North as well as South America.
AGCO Corp. continues to invest in its full product line of farm
equipment with a view to expanding its current product offering. It
has introduced more technological and localized complimentary
products like sprayers for row customers in Brazil, high technology
tractors like Fendt 700 Vario equipped with Selective Catalytic
Reduction (SCR) engine technology in Europe and North America.
Moreover, AGCO Corp. also continues with its strategy to expand
in the emerging markets. The company wants to extend its businesses
in the CIS region and establish local manufacturing abilities to
take the advantage of growth opportunities in this region where
immense tracts of farmland are being cultivated using inefficient
machinery. In addition, it has plans to invest in production
facilities in China over the next few years.
AGCO Corp. is a leading manufacturer and distributor of
agricultural equipment and related replacement parts. It competes
with companies like
Deere & Company
CNH Global NV
Currently, we have a long-term Outperform recommendation on AGCO
Corp. The stock retains a short-term Zacks #1 Rank ("Strong Buy"
AGCO CORP (AGCO): Free Stock Analysis Report
CNH GLOBAL NV (CNH): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis Report
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