The latest episode of On the Record is now available! In this week’s program, we cover AGCO and CNH Industrial’s 4Q and full year 2019 results. Art’s Way also reported its 4Q and year-end sales, including a 59% improvement in 4Q sales vs. the same period last year. Also in this episode: strides in rural broadband access and an improvement in producer sentiment.
On the Record is brought to you by Ingersoll Tillage.
This episode of On the Record is brought to you by Ingersoll Tillage. Ingersoll specializes in seedbed solutions. Whatever seedbed challenges you have, Ingersoll can give you the right tools to get the job done. For every tillage and planting practice, there’s an ideal Ingersoll application.
On the Record is now available as a podcast! We encourage you to subscribe in iTunes, the Google Play Store, Soundcloud, Stitcher Radio and TuneIn Radio. Or if you have another app you use for listening to podcasts, let us know and we’ll make an effort to get it listed there as well.
We’re interested in getting your feedback. Please feel free to send along any suggestions or story ideas. You can send comments to firstname.lastname@example.org.
I’m Executive Editor Kim Schmidt, welcome to On the Record! Here’s an update on what’s currently impacting the ag equipment industry.
AGCO 4Q & Full Year 2019 Sales Drop 3%
AGCO reported its fourth quarter and full year 2019 earnings on Feb. 6. For the quarter, the company reported net sales of about $2.5 billion, a 3.3% drop vs. the fourth quarter of 2018. Net sales for the full year were also down 3.3% at $9 billion.
Looking at net sales regionally, North America and Europe/Middle East were the only 2 regions to show growth in the fourth quarter. North American Sales were up 1.8%, while EME sales were up just 0.2%. South America saw the largest drop at down 20% vs. the fourth quarter of 2018. Asia/Pacific/Africa sales were down 13.3%
Martin Richenhagen, AGCO’s chairman, president and CEO says their results were impacted by higher than anticipated new product warranty costs. Warranty expenses increased by about $23 million in the fourth quarter. This was primarily due to field product improvement campaign costs to support new harvesting products, the company says.
Looking ahead, AGCO is forecasting relatively flat global demand in 2020.
CNHI 2019 Revenues Decline 6%
CNH Industrial also reported its fourth quarter and year-end earnings on Feb. 7.
For the quarter, consolidated revenues were $7.7 billion, down 6% compared to the fourth quarter of 2018. For the full year 2019, consolidated revenues were $28.1 billion, also down 6% vs. last year.
Ag revenues for the full year had a similar result, down 6.2% vs. 2018 to $11 billion. The company says the decrease was primarily driven by lower industry volumes in North America and Rest of World markets, coupled with actions to reduce dealer inventories in the second half of the year. This was partially offset by price realization performance across all geographies and sustained aftermarket activity.
Fourth quarter ag revenues were $2.9 billion, down 7.2% compared to the fourth quarter of 2018.
Looking ahead, CNH Industrial says it expects farmers’ sentiment to gradually stabilizing during 2020 even though soft commodity prices remain under pressure. The company says it will continue to manage production prudently until it sees signs of improved end-market demand, particularly in this first quarter. CNHI will maintains strict cost discipline and accelerate its simplification and optimization initiatives, while continuing to invest in precision and digital farming solutions.
Dealers on the Move
This week’s Dealers on the Move include AKRS Equipment, Robertson Implements, Bob Mark New Holland and L.F. Trottier & Sons.
Nebraska John Deere dealerships Green Line Equipment, Stutheit Implement and Plains Equipment Group announced plans to merge their businesses, creating AKRS Equipment Solutions. The new dealer group will have 27 locations across Nebraska and part of Kansas. The deal is expected to close by the end of March 2020.
New Holland dealership Robertson Implements has acquired 4 locations from Moody’s Equipment. The dealership now has 11 locations in Alberta and Saskatchewan. The North Battleford and Lloydminster locations of Moody’s have been purchased by Novian Bros.
Bob Mark New Holland announced plans for a fourth location in Napanee, Ont. The new store is expected to open in Spring 2020.
Vermont John Deere dealer L.F. Trottier & Sons announced plans to sell the family-owned business to a large Texas-based distributor of John Deere equipment. The dealership has two stores in South Royalton and Hartland, Vt.
Now here’s Jack Zemlicka with the latest from the Technology Corner.
Designing AI Architecture with Rural Broadband
Digital connectivity is taken for granted in many areas, but high-speed internet is still absent in many rural areas throughout the country.
According to a 2019 USDA report, if expansion of reliable digital connectivity into rural farming areas were achieved, the benefits could result in a nearly 18% increase in total production, which could equate to more than $50 million in annual gross benefit for U.S. agriculture.
Government initiatives to expand rural broadband appear to be gaining momentum, as the FCC voted in late January to advance a $20 million plan to improve broadband connectivity in underserved rural areas.
The Rural Digital Opportunity Fund (RDOF) plan is an extension of a 2018 program which allocated nearly $1.5 billion to create broadband infrastructure for more than 700,000 rural homes and businesses across 45 states.
The improvements could have short- and longer-term benefits for farmers and precision service providers, says Todd Janzen, attorney with Janzen Ag Law in Indianapolis, especially as automation continues to expand in ag.
“If we’re talking about increased field connectivity, that would be very valuable because we’re hearing and seeing more talk about using artificial intelligence and machine learning on equipment. For that to work, you have to have a good connection to some form of cloud-based process…because your artificial intelligence doesn’t usually just exist on the device. It’s usually connected to some larger mainframe or server where it can combine data and information with other users as well to make decisions.”
Another factor in the expansion of rural broadband is the development of 5G wireless connectivity. The gradual rollout of the network, which began in 2019, by select service providers is designed to provide higher bandwidth and lower latency to a higher volume of digital devices.
Art’s Way 4Q Ag Revenues Improve 59%
Art’s Way Manufacturing had a solid fourth quarter to finish off its 2019 fiscal year. This was the strongest fourth quarter the company has had since 2014.
At the end of the third quarter of 2019, Art’s Way’s agricultural products segment sales were down 18.4% year-over-year. For the full year, ag segment sales were down 5.8%, largely due to a strong fourth quarter. The last quarter of the year saw a 59% year-over-year improvement in ag product sales.
Overall, Art’s Way finished 2019 with a 16% improvement over 2018, recording $22.9 million in net sales for the year.
Now here’s Associate Research Editor Ben Thorpe with a report on the results of the latest Ag Economy Barometer from Purdue University.
Farmer Sentiment Rises in January
Purdue University’s Ag Economy Barometer rose to 167 in January, a 17 point jump from the 150 reported in December. The rise in this month’s barometer was mostly attributed to an increase in optimism about future conditions in agriculture. The Index of Future Expectations rose to 179, while the Index of Current Conditions was mostly unchanged from December. The improvement in future expectations coincided with President Trump’s signing of the Phase One Trade Agreement between the U.S. and China.
The percentage of farmers who expect the soybean trade dispute to be settled rose to 69% in January, up from 54% in December. That percentage has been rising since July when 22% of producers said they expected a quick resolution to the dispute. At the same time, a total of 80% of farmers in January said they expect a favorable outcome to the trade dispute, compared to 72% in December.
Despite the improvement in future expectations, the Farm Capital Investment Index fell 4 points in January to 68. The index is based on a question that asks farmers if now is a good time to make large investments in things like machinery and buildings. Despite the small decline in January, the index remains stronger than it was in late summer, when it ranged from the high 40s to the high 50s.
And now from the Implement & Tractor Archives…
Implement & Tractor Archives
New Holland traces its roots back to 1895, when Abram Zimmerman founded a blacksmith shop in the Pennsylvania town of that name. In order to expand his business, he began retailing stationary engines to power farm machines such as animal feed mills, but his customers often found that the units froze during harsh winters. This led him to develop a freeze-proof engine of his own design. Although it underwent changes of ownership and management, the New Holland Machine Company grew to later develop a number of successful farm implements, notably the first self-tying pick-up baler.
As always we welcome your feedback. You can send comments and story suggestions to email@example.com