AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.3 billion for the first quarter of 2014, a decrease of approximately 2.9% compared to net sales of $2.4 billion for the first quarter of 2013. Net income for the first quarter of 2014 was $1.03 per share. These results compare to net income of $1.19 per share for the first quarter of 2013. Excluding unfavorable currency translation impacts of approximately 2.1%, net sales in the first quarter of 2014 decreased approximately 0.8% compared to the first quarter of 2013.

First Quarter Highlights

• Regional sales results⁽¹⁾: North America +5%, Europe/Africa/ Middle East (“EAME”) +1%, South America -9%, Asia/Pacific (“APAC”) -17%
• Regional operating margin performance: EAME 9.8%, North America 8.6%, South America 7.9%, APAC -1.3%
• Full year earnings per share guidance maintained at $6.00
• Share repurchase program reduces outstanding shares by 4.2 million during Q1 2014

⁽¹⁾Excludes currency translation impact. See reconciliation of Non-GAAP measures in appendix.

“AGCO performed well in the first quarter with relatively flat sales and stable gross margins compared to the first quarter of 2013, despite softer market conditions and a weaker product mix across most of the global markets,” stated Martin Richenhagen, Chairman, President and Chief Executive Officer. “We are focusing our efforts on increasing productivity and reducing material costs throughout our operations to offset these market headwinds. We also demonstrated our commitment to return cash to stockholders by making meaningful progress with the $500 million share repurchase program announced in December of 2013.”

Market Update

Industry Unit Retail Sales

“While row crop economics generally remain healthy, grain prices have declined significantly from the levels in early 2013, and income for grain producers in most regions is expected to be lower in 2014 compared to 2013,” stated Mr. Richenhagen. “More recently, a cold, late winter that has delayed planting across much of North America and the ongoing political uncertainty in Eastern Europe have both contributed to a recent increase in crop prices. Industry demand in North America continues at healthy levels with softening sales of high-horsepower tractors and combines offset by growth in the lower horsepower categories due to improved conditions in the dairy and livestock sectors. Demand for farm equipment remains mixed across Western Europe, with a similar shift in demand from the arable farming sector to the dairy sector. Industry sales have started to recover in the United Kingdom and have remained healthy in Germany. Demand continues to be weak in Finland and has softened in France. Industry sales declined sharply in Brazil as delays with government financing programs and weaker demand from the sugar producers limited sales in early 2014. Despite these near-term challenges, the longer-term trends that have increased demand for grains are expected to intensify, supporting healthy long-term fundamentals for the agricultural industry.”

Regional Results

AGCO Regional Net Sales (in millions)

North America

AGCO’s North American sales grew 5.2% in the first quarter of 2014 compared to the first quarter of 2013, excluding the impact of unfavorable currency translation. Elevated levels of farm income in 2013 continued to support industry demand in the first quarter of 2014 led by the dairy, protein and professional hay segments. The most significant increases were in hay tools and lower horsepower tractors. A weaker sales mix and lower production volumes contributed to a decline in income from operations of $16.6 million for the first quarter of 2014 compared to the same period in 2013.

South America

South American net sales decreased 9.3% in the first quarter of 2014 compared to the first quarter of 2013, excluding the negative impact of currency translation. Lower sales in Brazil produced most of the decrease. Income from operations decreased $20.4 million for the first quarter of 2014 compared to the same period in 2013 due to lower sales and production volumes as well as increased expenditures on engineering.

EAME

Net sales, excluding currency translation impacts, were approximately flat in AGCO’s EAME region in the first quarter of 2014 compared to the first quarter of 2013 despite softer market conditions. Sales growth in Germany and Scandinavia was offset by declines in France and other European markets. EAME operating income improved by $21.2 million in the first quarter of 2014 compared to the same period in 2013. AGCO’s results were positively impacted by slightly higher sales levels, improved factory productivity and the benefit of cost reduction initiatives.

Asia/Pacific

Excluding the negative impact of currency translation, net sales in the Asia/Pacific region declined 16.6% in the first quarter of 2014 compared to the first quarter of 2013. Income from operations in the Asia/Pacific region declined $6.8 million in the first quarter of 2014, compared to the same period in 2013, due to lower sales and increased market development costs in China.

Outlook

Global industry demand is expected to soften in 2014 compared to 2013. Modest declines are anticipated for Western Europe and North America with more pronounced declines in South America. AGCO is targeting earnings per share of approximately $6.00 for the full year of 2014. Net sales are expected to range from $10.8 billion to $11.0 billion. Gross margin improvement is expected to be partially offset by increased engineering expenditures to meet Tier 4 final emission requirements and market development expenses.

“We remain on track to meet our 2014 financial targets and make meaningful progress toward our strategic initiatives,” continued Mr. Richenhagen. “We will maintain our focus on improving profitability and reducing working capital throughout 2014, while also making significant investments targeted at increasing productivity in our factories and delivering high-tech solutions that help farmers improve their efficiency and productivity. We are also forecasting another year of solid cash generation after funding our growth investments.”