DULUTH, Ga. — AGCO (NYSE:AGCO), reported net sales of approximately $2.2 billion for the third quarter of 2018, an increase of approximately 11.5% compared to the third quarter of 2017. Excluding unfavorable currency translation impacts of approximately 5.9%, net sales in the third quarter of 2018 increased approximately 17.4% compared to the third quarter of 2017.
Net sales for the first 9 months of 2018 were approximately $6.8 billion, an increase of approximately 17% compared to the same period in 2017. Excluding favorable currency translation impacts of approximately 1.8%, net sales for the first 9 months of 2018 increased approximately 15.1% compared to the same period in 2017.
Third Quarter Highlights
Reported regional sales results vs. 3Q17: North America +12.8%, Europe/Middle East (“EME”) +14.4%, South America +2.8%, Asia/Pacific/Africa (“APA”) +5.7%
Excluding the impact of currency translation, constant currency regional sales results: North America +13.8%, EME +16.5%, South America +33.1%, APA +9.9%
Regional operating margin performance: North America 6%, EME 9.3%, South America 4.5%, APA 7.9%
“AGCO’s solid operational performance across our regional business units and constructive market developments are driving sales and earnings growth,” said Martin Richenhagen, AGCO’s chairman, president and chief executive officer. “We delivered sales and operating income improvement across all regions, with the strongest growth in North and South America. Price increases and focused cost control efforts helped to offset most of the trade-related material cost inflation. Equally important, we have delivered operationally while making significant progress on our long-term strategic growth drivers. Our new product launches are resonating with customers, resulting in strong demand across our targeted end-markets.”
AGCO’s North American net sales increased 22.2% in the first 9 months of 2018 compared to the same period of 2017, excluding the positive impact of currency translation. Precision Planting, which was acquired in the fourth quarter of 2017, contributed sales of approximately $97.2 million in the first 9 months of 2018. Excluding the impact of acquisitions and currency translation, sales grew approximately 14.2% compared to the first 9 months of 2017. The largest increases were in sprayers, high horsepower tractors and hay tools. Income from operations for the first 9 months of 2018 improved approximately $42.5 million compared to the same period in 2017. The benefit of the Precision Planting acquisition and higher sales and production volumes contributed to the increase.
Net sales in the South American region increased 8.6% in the first 9 months of 2018 compared to the first 9 months of 2017, excluding the impact of unfavorable currency translation. Sales growth in Brazil was partially offset by declines in Argentina. Income from operations increased in the third quarter, but dropped approximately $35.2 million for the first 9 months of 2018 compared to the same period in 2017. The impacts of material cost inflation and costs associated with transitioning to new products with tier 3 emission technology contributed to the decrease in income from operations.
Europe/Middle East net sales increased 15% in the first 9 months of 2018 compared to the same period in 2017, excluding favorable currency translation impacts. Acquisitions benefited sales by approximately 3.3% during the first 9 months compared to the same period last year. Sales growth was strongest in Germany, the United Kingdom and France. Income from operations improved approximately $85.4 million for the first 9 months of 2018, compared to the same period in 2017, due to the benefit of higher sales and margin improvement partially offset by higher engineering costs.
Net sales in AGCO’s Asia/Pacific/Africa region increased 7.1%, excluding the positive impact of currency translation, in the first 9 months of 2018 compared to the same period in 2017. Higher sales in Australia produced most of the increase. Acquisitions benefited sales by approximately 2.5% during the first 9 months of 2018 compared to the same period last year. Income from operations improved approximately $3.7 million in the first 9 months of 2018, compared to the same period in 2017, due to higher sales and production levels.
AGCO’s net sales for 2018 are expected to reach $9.3 billion, reflecting improved sales volumes, positive pricing as well as acquisition and foreign exchange impacts. Gross and operating margins are expected to improve from 2017 levels due to higher net sales as well as the benefits resulting from the company’s cost reduction initiatives, partially offset by increased engineering expenses and higher material costs.