APR 98] AGCO PRESS RELEASE
AGCO Reports Record First Quarter Net Earnings:
Net Earnings Increase 27%
(NYSE:AG) today reported record net earnings for the first quarter ended 31 March 1998.
The Company reported net sales of $701.5 million and net earnings of $32.7 million, $.52
per share for the first quarter. Net earnings increased 27% over 1997 and earnings per
share increased 18%.
Earnings on Comparable Basis
AGCOs first quarter 1997 results included nonrecurring expenses of $2.6 million,
$.03 per share, and an extraordinary after-tax charge for the write-off of unamortized
debt costs related to the refinancing of its revolving credit facility of $2.1 million,
$.03 per share.
For comparative purposes, excluding the nonrecurring charge and the write-off of
unamortized debt costs recorded in 1997 net earnings were $29.5 million, $.50 per share,
for the first quarter of 1997, versus $32.7 million and $.52 per share for the first
quarter of 1998.
Robert Ratliff, AGCOs Chairman and Chief Executive Officer stated,
"AGCO continues to produce positive earnings growth. Our emphasis on margin
improvement has been especially beneficial, despite the negative influence of currency
movement and the decline in European and Asian markets."
Sales in the first quarter of 1997 included approximately $19 million in sales from the
Fendt Caravan and the Deutz Argentina engine businesses. Fendt Caravan was sold in
December 1997. Also in December 1997, AGCO sold 50% of its Deutz-Argentina engine business
to Deutz AG in the formation of a joint venture.
Sales were negatively impacted by approximately $32 million in the first quarter of
1998 as a result of the translation effect of the strengthening dollar against most
European currencies. Excluding the currency impact and sales from disposed businesses,
AGCOs sales increased 7% over the first quarter of 1997.
Excluding nonrecurring charges, AGCOs operating margin for the first quarter
improved to 9.7% in 1998 compared to 8.4% in 1997.
"AGCOs introduction of new products in the second half of 1997 has greatly
contributed to improved margins compared to last year," Mr Ratliff stated.
"Additionally, the acquisition of Dronningborg in December of 1997 has given us
the opportunity to begin to generate synergies in combine production and sourcing."
Included in the first quarter operating expenses were $3.2 million, $.03 per share, of
amortization expense relating to the Companys Long-Term Incentive Plan compared to
$2.6 million, $.03 per share in the prior year.
Regional Results - North America
Unit sales of AGCO tractors increased approximately 7% during the first quarter of
1998, slightly less than the 10% industry increase. Increased sales of Massey Ferguson
midrange and high horsepower tractors contributed to AGCOs year-over-year increase.
Regional Results - Western Europe
"The North American market continues to be strong and reflects the farmers
optimism and strong cash position," said Mr. Ratliff.
"Although the first quarter is generally the slowest quarter for equipment
purchases, we are encouraged by the favorable acceptance of our new products in North
Industry retail unit sales of tractors in Western Europe declined approximately 5% in
1998 compared to 1997 levels. Retail unit sales of AGCO tractors increased 2%.
Regional Results - South America
"Industry results in Western Europe continue to be impacted by a severe decline in
the UK market compared to the first quarter of last year," Mr. Ratliff stated.
"The remaining European markets, excluding the industry sales in the UK, declined
Industry retail sales of tractors in Brazil increased 34% over last year, and
AGCOs sales lagged the industry. Industry sales of tractors in Argentina decreased
11% compared to 1997, and AGCOs sales decreased in line with the industry. Industry
combine sales, which are seasonally strong in the first quarter, were up approximately 65%
in Brazil and 5% in Argentina. AGCOs combine sales exceeded industry sales in both
"Improved farmer financial conditions, as well as a strong harvest, contributed to
the continued strong rebound in the Brazilian markets," said Mr Ratliff.
"Our tractor market share remains strong at approximately 38%, and we continue to
hold the line on pricing in a very competitive environment. Margin improvements in South
America have contributed greatly to AGCOs overall results."
Rest of the World Markets
Outside North America, Western Europe, and South America, AGCOs net sales
decreased approximately $22 million or 24% compared to the first quarter of 1997.
Mr Ratliff said, "The Asian markets were down significantly over 1997 due to
economic difficulties in that region, which was in line with our expectations."
Finance Company Results
AGCOs global retail finance joint ventures,
Agricredit, contributed $2.8 million to net earnings for the first quarter of 1998,
compared to $2.3 million in 1997.
AGCO also announced that its Board of Directors approved a quarterly dividend on the
Companys common stock of $.01 per share. The dividend is payable 1 June 1998, to
holders of record 15 May 1998.
AGCO Corporation, headquartered in Duluth, Georgia, is a
global designer, manufacturer and distributor of agricultural equipment and related
replacement parts. AGCO products are distributed in 140 countries. AGCO offers a full
product line including tractors, combines, hay tools, sprayers, forage equipment and
implements through more than 8,500 independent dealers and distributors around the world.
AGCOs products are distributed under the brand names AGCO®Allis, Massey Ferguson®,
Hesston®, White, GLEANER®, New Idea®, AGCOSTAR®, Black Machine, Landini, Tye®,
Farmhand®, Glencoe®, Deutz (South America), IDEAL and Fendt. AGCO provides retail
financing worldwide through its Agricredit joint venture. In 1997 AGCO had sales of $3.2
Safe Harbor Statement
Statements which are not historical facts are subject to
risks which could cause actual results to differ materially. The Company bases its outlook
on key operating, economic and agricultural data which are subject to change including:
farm cash income, worldwide demand for agricultural products, commodity prices, grain
stock levels, weather, crop production, farmer debt levels, existing government programs
and farm-related legislation. Additionally, the Company's financial results are sensitive
to movement in interest rates and foreign currencies, as well as general economic
conditions, pricing and product actions taken by competitors, production disruptions and
changes in environmental, international trade and other laws which impact the way in which
it conducts its business.
Judith Czelusniak, Vice President Corporate Relations (770) 813-6044
Patrick Shannon, Vice President and CFO (770) 813-6164