) posted first-quarter 2013 earnings of $1.19 per share,
declining 1.6% from the prior-year quarter's earnings of $1.21
per share. The results, however, beat the Zacks Consensus
Estimate of 88 cents.
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Revenues in the reported quarter increased 5.7% year over year to
$2.4 billion and exceeded the Zacks Consensus Estimate of $2.2
billion. The growth was mainly driven by strong market demand in
South America and the Asia Pacific region.
Cost of sales increased 5% to $1.87 billion in the first quarter
from $1.78 billion in the year-ago quarter. Gross profit in the
reported quarter was $533 million, up 8% compared with $493
million in the prior-year quarter. Consequently, gross margin
expanded 50 basis points (bps) year over year to 22.1% in the
Selling, general and administrative expenses amounted to $255.7
million, inched up 7% from the year-ago quarter. Segment income
from operations plummeted 7% to $225.6. Consequently, operating
margin expanded 10 bps to 9.4% from the prior year quarter.
The North American region's sales jumped 10.2% year over year to
$624 million in the quarter. Segment's income from operations
improved 43.6% to $72.1 million from $50.2 million, due to higher
sales and margin improvement initiatives.
Sales in South America went up 26.4% year over year to $465.7
million in the reported quarter. Income from operations for the
segment increased nearly two-fold to $48.3 million in the
reported quarter. Higher sales and the benefit of cost reduction
initiatives contributed to the year-over-year growth.
The EAME (Europe, Africa, and Middle East) region sales
were $1,193 million, flat compared to the year-ago quarter. The
EAME operating income, however, declined 26.5% to $99.7 million.
The income was negatively impacted by a poor sales mix, increased
engineering expenses and transition costs associated with the new
Fendt tractor assembly facility.
Sales in the Asia Pacific region inflated 30.4% year over year to
$120 million in the first quarter. Income from operations in the
reported quarter surged nearly six-fold to $5.5 million, driven
by higher sales. The hike was partly offset by increased market
development costs in China.
As of Mar 31, 2013, cash and temporary investments amounted to
$551.7 million versus $781.3 million as of Dec 31, 2012.
Long-term debt was $1.87 billion as of Mar 31, 2013, compared
with $1.73 billion as of Dec 31, 2012. Debt-to-capitalization
ratio was 25.9% as of Mar 31, 2013, compared to 23.9% as of Dec
31, 2012. Cash flow from operating activities was $261.3 million
in the reported quarter versus $280.5 million in the prior-year
AGCO revised its full year of 2013 earnings per share range of
$5.50-$5.70 from the previous range of $5.50-$5.75 based on
modest declines anticipated in the Western European region.
However, the company raised full year revenue band from
$10.2-$10.4 billion to $10.5-$10.7 billion. The enhancement in
full year outlook depends on the projected growth in South
America while, North America is expected to remain stable.
AGCO also expects gross margin to improve in 2013 compared with
2012, partly offset by increased engineering expenditures. The
company also expects global industry demand to remain flat in
2013 compared with 2012.
The company remains committed to its plans of expanding its
business in international markets. It expects elevated
agricultural commodity prices in 2013 to support healthy farm
income and sustain a stable equipment demand. However, soft
demand for grain storage and protein production equipment,
start-up issues at the Marktoberdorf plant and increased
engineering expenses to meet Tier 4 requirements will weigh on
the near-term results.
Duluth, GA-based AGCO is a global leader focused on the design,
manufacture and distribution of agricultural machinery. AGCO
supports more productive farming through a full line of tractors,
combines, hay tools, sprayers, forage equipment, tillage,
implements, grain storage and protein production systems, as well
as related replacement parts.
AGCO currently retains a short-term Zacks Rank #3 (Hold). Other
companies in the machinery and farming industry are
Deere & Co
CNH Global NV