) posted fourth-quarter 2012 adjusted earnings of 99 cents per
share, a 31% drop from the prior-year quarter's earnings of $1.44
per share. The results, however, beat the Zacks Consensus
Estimate of 98 cents.
On a reported basis, earnings plunged 64% to $1.04 per share from
the prior-year quarter's earnings of $2.90 per share. Earnings in
the reported quarter include asset impairment charges of 22 cents
per share and tax benefit of 27 cents per share, while the
year-ago quarter's earnings include a tax benefit of $1.46 per
share associated with the acquisition of GSI.
On a reported basis, earnings for full-year 2012 were $5.30 per
share compared with $5.95 posted in 2011.
Revenues in the reported quarter increased 7.4% year over year to
$2.7 billion and exceeded the Zacks Consensus Estimate of $2.6
billion. The growth was mainly driven by an increase in sales in
South America and the Asia Pacific region.
Revenues for the full year increased 13.6% to roughly $10 billion
from $8.8 billion in 2011.
The North American region's sales jumped 9% year over year to
$652.3 million in the quarter. Sales in South America went up
14.1% to $511.9 million. EAME (Europe, Africa, and Middle East)
region sales improved 1.8% to $1,406.5 million. Sales in the Asia
Pacific region inflated 49.1% to $132.7 million.
Cost of sales increased 9% to $2.17 billion in the fourth quarter
from $1.99 billion in the year-ago quarter. Gross profit in the
reported quarter was $527.8 million compared with $524.1 million
in the prior-year quarter. Gross margin declined 130 basis points
(bps) year over year to 19.5% in the quarter.
Selling, general and administrative expenses amounted to $284.5
million, a 15% year over year decline. Operating profit plummeted
36% to $118.9 million due to lower production and start-up costs.
Consequently, operating margin contracted 290 bps year over year
to 4.4% from the prior year quarter.
Cash and cash equivalents increased 7.8% year over year to $781.3
million at the end of 2012. Long-term debt was $1.28 billion as
of Dec 31, 2012, a 12% year-over-year decrease.
Debt-to-capitalization ratio reduced to 36% as of Dec 31, 2012,
from 48% as of Dec 31, 2011.
Cash flow from operating activities was $666.4 million in the
quarter versus $725.9 million in the prior-year quarter. Capital
expenditure increased 13% year-over-year to $340.5 million. The
company had free cash flow of $325.9 million in the reported
quarter, a 23% year over year decline.
Outlook for 2013
AGCO expects adjusted earnings per share for 2013 to be in the
range of $5.50-$5.75 based on higher crop prices and stable
equipment demand. Its earnings forecast include a year-over-year
increase in income tax expense of 40 cents per share.
The company is targeting revenues in a band of $10.2-$10.4
billion factoring in pricing benefits and neutral currency
impact. It also believes that gross and operating margins will
improve compared with 2012.
Investment in new products, including upgraded harvesting, high
horsepower tractor and sprayer offerings will enhance AGCO's
presence in the Commonwealth of Independent States (CIS), Russia,
China and Africa.
For 2013, the company is planning to spend in manufacturing
facilities ensuring the improvement in productivity and growth.
In addition, the Marktoberdorf plant in Germany will increase
both production capacity and efficiency of the company.
AGCO retains a short-term Zacks Rank #3 (Hold).
Deere & Co
Titan International Inc
) also belong to the machinery and farm industry. While Lindsay
retains a Zacks Rank #1(Strong Buy), Deere and Titan
International hold a Zacks Rank #2 (Buy).
AGCO CORP (AGCO): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis
LINDSAY CORP (LNN): Free Stock Analysis
TITAN INTL INC (TWI): Free Stock Analysis
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