Company Achieves Full Year Adjusted EPS of $1.55 and Reported EPS of $1.44
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $1.9 billion for the fourth quarter of 2009, a decrease of approximately 14.1% compared to net sales of approximately $2.2 billion for the fourth quarter of 2008. Reported net income per share was $0.35 for the fourth quarter of 2009 and adjusted net income, which excludes restructuring and other infrequent expenses, was $0.42 per share for the fourth quarter of 2009. These results compare to reported and adjusted net income of $1.05 per share for the fourth quarter of 2008. Excluding favorable currency translation impacts of approximately 10.1%, net sales in the fourth quarter of 2009 decreased approximately 24.2% compared to the same period in 2008. Net sales for the full year of 2009 were approximately $6.6 billion, a decrease of approximately 21.3% compared to the full year of 2008. Excluding the unfavorable impact of currency translation of approximately 4.8%, net sales for the full year of 2009 decreased approximately 16.5% compared to the full year of 2008. For the full year of 2009, reported net income was $1.44 per share and adjusted net income, which excludes restructuring and other infrequent expenses, was $1.55 per share. These results compare to reported and adjusted net income for the full year of 2008 of $3.95 per share. "The year proved to be challenging for our industry and our Company. The global economic downturn and significantly lower demand across all of our major markets forced us to make dramatic changes to our operating plan during the year," stated Martin Richenhagen, Chairman, President and Chief Executive Officer. "We executed temporary plant shutdowns in all of our factories, reduced our workforce, made significant cuts in our production, and successfully lowered our company and dealer inventories. Despite the softening demand throughout the year, we were able to reduce inventory and accounts receivables by over $550 million dollars, on a constant currency basis, from 2008 year-end levels. We also maintained our strategically important research and development efforts and capital expenditure programs at high levels. Our financial discipline enabled us to further strengthen our balance sheet, resulting in a nearly net debt free position at year-end." "Today, we see stabilization in some markets but expect further weakness, especially in Europe and North America. We also have more work to do with our inventory reduction initiatives. In the first quarter of 2010, we have scheduled temporary plant shutdowns aimed at effectively managing inventory levels while efficiently operating our plants. These temporary closures will negatively impact our first quarter 2010 results. Despite the softer market conditions we face today, the healthy, long-term fundamentals of our industry remain intact. We will continue to invest in new product development, distribution enhancements and productivity improvements to enable our growth and improve our profitability." AGCO's South American region reported a sales increase of approximately 3.6% compared to the fourth quarter of 2008, excluding favorable currency translation impacts. Improving industry demand in Brazil produced most of the increase. The Europe/Africa/Middle East (EAME) region reported a sales decline of approximately 27.0% compared to the fourth quarter of 2008, excluding favorable currency translation impacts. Demand in the fourth quarter of 2009 continued to soften in France, Germany, Finland and Scandinavia, while the Russian and Eastern European markets remained extremely weak. In the North American region, sales in the fourth quarter declined approximately 42.0%, excluding favorable currency translation impacts, compared to the fourth quarter of 2008. Lower sales of utility tractors and hay products tied to the dairy and cattle sectors as well as dealer inventory reductions resulted in the decline. Lower net sales and reduced gross margins contributed to a decline in income from operations for the fourth quarter of 2009. Gross margins declined due to lower production volumes and a weaker product mix, partially offset by factory cost containment initiatives. The Company maintained its investment in new product development, resulting in engineering expense in the full year of 2009 at levels comparable to the prior year. Unit production of tractors and combines for the fourth quarter of 2009 was approximately 23.0% below the comparable 2008 level.
