AGCO Corp. Shares Rise 2% Despite Q3 Earnings Missing Estimates
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AGCO Corporation AGCO delivered an adjusted earnings per share of 68 cents in third-quarter 2024, missing the Zacks Consensus Estimate of $1.07. The bottom line fell 83% year over year. Low commodity prices and elevated input costs impacted equipment demand in the quarter.
Despite the weaker-than-expected earnings, AGCO shares have gained 2% since, backed by the company’s aggressive cost control actions and portfolio adjustments, which will sustain margins amid weak demand. AGCO recently completed the divestiture of the Grain & Protein business on Nov. 1. This will help focus on high-growth agricultural machinery and precision agriculture technology, driving long-term profitability and cash flow.
AGCO Corporation Price, Consensus and EPS Surprise
AGCO Corporation price-consensus-eps-surprise-chart | AGCO Corporation Quote
Including one-time items, AGCO posted earnings of 40 cents per share compared with the year-ago quarter’s earnings of $3.74.
Revenues decreased 24.8% year over year to $2.6 billion in the September-end quarter. The top line missed the Zacks Consensus Estimate of $2.9 billion. Excluding the unfavorable currency-translation impacts of 0.6%, net sales fell 24.2% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
AGCO Corp.’s Q3 Operational Update
Cost of sales decreased 20.8% year over year to around $2 billion in the third quarter. The gross profit decreased 35.4% year over year to $603 million in the reported quarter. The gross margin was 23.2% compared with the prior-year quarter’s 27%.
Selling, general and administrative expenses were $344 million compared with the year-ago quarter’s $356 million. The adjusted income from operations fell 67% year over year to $144 million. The operating margin was 5.5% compared with the year-earlier quarter’s 12.6%.
AGCO’s Q3 Segmental Performance
Sales in the North America segment moved down 21.8% year over year to $736 million in the third quarter. The reported figure missed our estimate of $789 million. The segment reported an operating income of $53 million compared with the prior-year quarter’s $140 million. Our projection for the segment’s operating income was $56 million. The downside was driven by softer industry sales and lower end-market demand.
Sales in the South America segment decreased 47% year over year to $382 million. We expected the segment’s net sales to be $497 million. The segment reported an operating profit of $45 million compared with the prior-year quarter’s $150 million. Our estimate for the segment's operating income was $37 million. The decline was due to softer industry retail sales and lower sales of high-horsepower tractors.
The Europe/Middle East (EME) segment’s sales were around $1.3 billion compared with the $1.6 billion reported in the year-ago period. The reported figure missed our estimate of $1.49 billion, driven by lower sales across most European markets. The EME’s operating income was $83 million compared with the year-ago quarter’s $199 million. We predicted EME’s operating income to be $181 million.
Sales in the Asia/Pacific segment were down 11.7% year over year to $183 million. We expected the segment’s sales to be $163 million. The segment registered an operating profit of $7 million compared with the year-ago quarter’s $19 million. Our projection for the segment’s operating profit was $6.5 million.