DULUTH, GEORGIA, US — AGCO’s net income and net sales dropped in the first quarter ended March 31, as demand for global agricultural equipment declined.

The company reported net income of $168 million compared to $232.6 million in the same quarter a year ago. Net sales dropped 12.1% to $2.9 billion.

"Our results reflect the declining global demand for the agricultural equipment industry, and as anticipated, correspondingly significant production cuts that still led to solid results,” said Eric Hansotia, AGCO’s chairman, president and chief executive officer. “The reductions were aimed at helping reduce dealer inventories. While cost and working capital management remain a priority to mitigate market pressures, we continue to reward shareholders through dividends and investing in our three margin-rich initiatives: growing our precision ag business, globalizing a full-line of our Fendt branded products and expanding our parts and service business.

"Planting activities are under way in the northern hemisphere and healthy yields would result in increases to grain inventories. Farm income levels are expected to further moderate in 2024, aligning more closely to historical averages following three prosperous years. We continue to expect increased adoption of precision technology, but more challenging farm economics are resulting in weaker global industry demand across most equipment categories. In the first quarter of 2024, retail tractor industry demand fell by an average of 10% across the three major regions."

In North America, lower projected farm income and a refreshed fleet are expected to pressure industry demand in 2024, resulting in weaker industry sales compared to 2023.

Following three strong years, retail demand in South America is expected to further soften in 2024 because of lower commodity prices and farm income.

In Western Europe, farmer sentiment has continued to be negatively impacted by the conflict in Ukraine and high input cost inflation. Industry demand is expected to soften in 2024 as lower income levels pressure demand from arable farmers, while healthy demand from dairy and livestock producers is expected to mitigate some of the decline.

On April 1, AGCO acquired an 85% stake in PTx Trimble, which it said enhances the company’s retrofit and mixed-fleet precision ag business.

“The strategic alignment of these brands will expedite AGCO's technology transformation and support the future development and distribution of next-generation ag technologies for farmers and original equipment manufacturers around the world," Hansotia said.

AGCO's net sales for 2024, including the positive impact of PTx Trimble, are expected to be approximately $13.5 billion, reflecting lower sales volumes, adverse foreign currency translation and modest positive pricing.

Adjusted operating margins are projected to be approximately 11.3%, reflecting the benefits of consolidating PTx Trimble as well as the impacts of lower sales, lower production volumes, increased cost controls and modestly lower investments in engineering and other technology efforts to support AGCO's precision agriculture and digital initiatives.

Based on these assumptions, 2024 adjusted earnings per share are targeted at approximately $12.00.