Third Quarter Net Income of $65.0 million on Sales of $2.2 Billion

AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.2 billion for the third quarter of 2014, a decrease of approximately 13.0% compared to net sales of approximately $2.5 billion for the third quarter of 2013. Reported net income was $0.69 per share and adjusted net income, excluding restructuring and other infrequent expenses, was $0.71 per share for the third quarter of 2014. These results compare to reported and adjusted net income per share of $1.27 for the third quarter of 2013. Excluding unfavorable currency translation impacts of approximately 0.7%, net sales in the third quarter of 2014 decreased approximately 12.3% compared to the third quarter of 2013.

Net sales for the first nine months of 2014 were approximately $7.2 billion, a decrease of approximately 8.7% compared to the same period in 2013. Excluding the unfavorable impact of currency translation of approximately 0.7%, net sales for the first nine months of 2014 decreased approximately 8.0% compared to the same period in 2013. For the first nine months of 2014, reported net income was $3.50 per share and adjusted net income, excluding restructuring and other infrequent expenses, was $3.52 per share. These results compare to reported and adjusted net income of $4.61 per share for the first nine months of 2013.

Third Quarter Highlights

• Regional sales results⁽¹⁾: North America -22.2%, Europe/Africa/ Middle East (“EAME”) -5.4%, South America -18.4%, Asia/Pacific (“APAC”) +8.8%
• Regional operating margin performance: EAME 5.6%, North America 7.0%, South America 8.0%, APAC -0.7%
• Full year earnings per share guidance remains at $4.10 to $4.30
• Share repurchase program reduced outstanding shares by 6.4 million during the first nine months of 2014

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

“Our third quarter results were impacted by weaker markets and significant production cuts aimed at controlling our company and dealer inventories,” stated Martin Richenhagen, AGCO’s chairman, president and chief executive officer. “Declines in commodity prices and expectations of lower farm income in 2014 have negatively impacted our business. While we continue to perform well in the market, we are facing softening industry demand in Western Europe and North America and continued weakness in South America. We are taking aggressive actions to control expenses, reduce our production levels and lower our investments in working capital in response to lower market demand. We are balancing near-term cost reductions with continued investment in longer-term growth initiatives.”

Market Update

Industry Unit Retail Sales

“The record harvest unfolding in the U.S. combined with the healthy crop production across Western Europe and Brazil are resulting in increased estimates for post-harvest grain inventories, which continue to pressure soft commodity prices. Farmer sentiment is being negatively impacted by the outlook for deteriorating farm economics, and we are experiencing softer industry equipment demand in all major markets. Industry demand in North America has weakened with significant declines in sales of high-horsepower tractors, combines and sprayers, partially offset by growth in the lower-horsepower categories due to improved conditions in the region’s dairy and livestock sectors. Retail sales of farm equipment have declined across Western Europe. Industry sales have weakened in the largest markets of France and Germany, with modest recovery experienced in the United Kingdom and parts of Southern Europe. In Brazil, industry sales are lower and have been negatively impacted by weak demand from sugar producers, lower commodity prices and delays in the government financing program earlier in the year. Longer term, we expect grain demand to be supported by the growing population, increasing emerging market protein consumption and biofuel production. Increased demand for grain and attractive levels of farm income are expected to result in healthy long-term prospects for our industry.”

Regional Results

AGCO Regional Net Sales (in millions)

North America

Net sales, excluding unfavorable currency translation impacts, decreased 10.3% in AGCO’s North American region in the first nine months of 2014 compared to the same period in 2013 due to softer market conditions. The most significant decreases were in high-horsepower tractors and implements, with growth in small tractor sales partially offsetting the declines. Lower sales, a weaker sales mix and lower production volumes contributed to a decline in income from operations of $83.5 million for the first nine months of 2014 compared to the same period in 2013.

South America

Excluding the negative impact of currency translation, net sales in the South American region declined 13.1% in the first nine months of 2014 compared to the same period in 2013. Weaker market demand and lower sales in Brazil and Argentina produced most of the decrease. Income from operations decreased $85.7 million for the first nine months of 2014 compared to the same period in 2013 due to lower sales and production volumes, as well as a weaker mix of sales.

EAME

AGCO’s EAME net sales decreased 4.7% in the first nine months of 2014 compared to the first nine months of 2013, excluding the impact of favorable currency translation due to weaker end market demand. Sales declines in France, Germany and Eastern Europe were partially offset by growth in Africa and Turkey. EAME operating income decreased $37.0 million in the first nine months of 2014 compared to the same period in 2013. The negative impact of lower production levels and a weaker sales mix were partially offset by cost reduction initiatives.

Asia/Pacific

Asia/Pacific net sales decreased 6.6% in the first nine months of 2014 compared to the first nine months of 2013, excluding the negative impact of currency translation. Income from operations in the Asia/Pacific region declined $7.7 million in the first nine months 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 softening compared to 2013 and declines are anticipated across all major global agricultural markets, particularly in the row crop segment. AGCO is targeting earnings per share of approximately $4.10 to $4.30 for the full year of 2014. Net sales are expected to range from $9.5 billion to $9.7 billion. The negative impacts of lower sales and production volumes on gross margins are expected to be partially offset by cost reduction initiatives.

“The priority for the remainder of the year continues to be lowering our dealer and company inventories in order to better align us with current market demand,” continued Mr. Richenhagen. “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.”