AGCO Corporation reported a 16% year-over-year decline in its
fourth-quarter 2014 earnings to 1.18 per share due to significant
production cuts and negative effect of currency translation. AGCO
guided full year 2015 net sales in the range of $8.1 to $8.3
billion and earnings per share of approximately $3.00, reflecting
the impact of softer market conditions, unfavorable currency
translation and lower commodity prices. Weaker sales mix and
production volumes will also affect growth in the near term.
However, AGCO is poised to benefit from investment in new product
development, distribution enhancements and productivity
improvements. Additionally, focus on restructuring and cost
reduction initiatives will drive growth. Thus, we are reiterating
our Neutral recommendation on AGCO with a target price of $51.
Established in 1990, AGCO Corporation is a leading manufacturer
and distributor of agricultural equipment and related replacement
parts. The company offers a full product line of farm equipment
through a wide network of dealers and distributors in more than 140
countries across the world. AGCO Corporation's product line is
categorized under five groups: tractors, replacement parts,
combines, application equipment/sprayers, and other machinery.
The tractor business sells compact tractors (below 40
horsepower) typically used on small farms and in specialty
agricultural industries such as dairies, landscaping, and
residential areas. Moreover, AGCO Corporation provides utility
tractors (40-100 horsepower) and high horsepower tractors (100-500
horsepower) used in medium-scale and large-scale farms. The
replacement parts business supplies replacement parts for products
sold under each of its brand names. The unit sells combines under
the AGCO Allis, Gleaner, Massey Ferguson, Fendt, Valtra, and
Challenger brand names. Under the application equipment/sprayers
group, AGCO provides self-propelled three-and-four-wheeled vehicles
and related equipment for use in the application of liquid and dry
fertilizers and crop protection chemicals. The company also
manufactures other related equipment, including vehicles used for
waste application. Finally, within the machinery group, the company
sells hay tools and forage equipment, primarily under the Hesston,
Massey Ferguson, Challenger, Fendt, and AGCO Allis brand names.
AGCO Corp. also distributes an array of implements, planters and
other equipment for its product lines.
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