Farm-Equipment Maker Cuts Profit Outlook as Demand Weakens
Second-quarter net sales fell 1.0% to $2.610 billion as growth reversed from the first quarter.
Agricultural-equipment maker AGCO Corporation (AGCO) cut its full-year profit outlook after weaker industry conditions and cautious demand expectations overshadowed a sequential improvement in quarterly earnings.
Sales fell 1.0% from a year earlier, reversing from 14.3% growth in the first quarter. Excluding currency effects, sales declined 3.7% after rising 4.7%, though revenue increased about 11% sequentially. The shift came as first-half tractor sales declined 9% in North America and 11% in Brazil, while Western European growth slowed to 3%.
Adjusted earnings rose to $1.43 a share from $1.35 a year earlier and $0.94 in the first quarter, remaining below the fourth quarter's $2.17. Reported earnings climbed sequentially to $1.08 a share from 76 cents but fell from $4.22 a year earlier, when results included a large tax benefit.
AGCO's operating margin improved to about 5.4% from 3.4% in the first quarter but narrowed from 6.2% a year earlier. Gross margin held roughly steady sequentially at 24.8% and slipped from 25.0%.
North America provided the clearest growth, with constant-currency sales rising 19.8%, accelerating from 9.0% in the first quarter as unit sales of high-horsepower tractors and hay tools increased. The region's operating margin improved to negative 5.2% from negative 12.5%, helped by about $22 million of tariff-refund benefits, though higher tariff costs kept the loss roughly flat from a year earlier.
Elsewhere, constant-currency sales fell 4.7% in Europe and the Middle East after growing 9.0% in the first quarter, while the region's margin narrowed to 15.0%. Asia-Pacific and Africa sales declined 6.4%, but its margin improved to 7.7%. Latin American sales dropped 25.0%, and its operating margin remained negative despite improving to negative 8.0%.
AGCO's 2026 adjusted-earnings outlook now calls for $5.50 to $5.75 a share, down from approximately $6.00 previously. Weaker-than-expected industry conditions, currency fluctuations and a more cautious view of second-half demand contributed to the change.
The company repurchased $345 million of shares during the quarter and completed the approximately $190 million sale of its stakes in the U.S. and Canadian AGCO Finance ventures. Those capital moves came as first-half operating cash flow swung to a $245 million use of cash, with inventories and receivables absorbing more funds than a year earlier.