AGCO reported net sales of $3.9 billion for the fourth quarter of 2022, an increase of 23.6% compared to the fourth quarter of 2021. These results compare to reported net income of $3.75 per share and adjusted net income, which excludes restructuring expenses and the reversal of a valuation allowance previously established against the Company’s deferred tax assets in Brazil, of $3.08 per share, for the fourth quarter of 2021.
"For 2023, we expect continued sales growth and margin expansion as industry demand remains strong and our farmer-first strategy continues to gain traction," said Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer. "We assume global market conditions will remain healthy, as favorable farm economics allow farmers to continue to invest in new more productive equipment and technology upgrades. While improving, we expect supply chain pressures will persist, presenting challenges throughout the year. We remain focused on growing our high-margin precision ag business, globalizing the full-line of our Fendt branded products and expanding our parts and service business. We will continue to accelerate investments in premium technology, smart farming solutions and enhanced digital capabilities to support our farmer-first strategy while helping to sustainably feed the world.”
Net sales for the full year of 2022 were approximately $12.7 billion, which is an increase of 13.6% compared to 2021. Excluding unfavorable currency translation impacts of 8.5%, net sales for the full year of 2022 increased 22.1% compared to 2021. For the full year of 2022, reported net income was $11.87 per share, and adjusted net income, excluding impairment charges, restructuring expenses and other related items, was $12.42 per share.
North America
AGCO’s North American net sales increased 20.2% for the full year of 2022 compared to 2021, excluding the negative impact of currency translation. Increased sales of precision ag products and services as well as high horsepower tractors represented the largest increases. Income from operations for the full year of 2022 increased $40.7 million compared to 2021. The improvement was the result of higher sales and production, and positive net pricing partially offset by higher engineering expense as well as higher material costs.
South America
Net sales in the South American region increased 56.6% for the full year of 2022 compared to 2021, excluding the impact of favorable currency translation. Sales increased significantly across all the South American markets with strong growth achieved in high-horsepower tractors, combines and planting equipment. Income from operations for the full year of 2022 increased by $241.7 million compared to 2021 and operating margins exceeded 17.6%. The improved South America results reflect the benefit of higher sales and production, favorable pricing, and a better sales mix, partially offset by higher materials costs.
Europe/Middle East
Net sales in the Europe/Middle East region increased 18.5% for the full year of 2022 compared to 2021, excluding negative currency translation impacts. Healthy growth across all the major European markets contributed to the improvement. Increased sales of mid-range and high horsepower tractors as well as replacement parts produced most of the growth. Income from operations increased $28.7 million for the full year of 2022 compared to 2021, due to higher net sales and production volumes as well as significant price realization which more than offset higher material costs and engineering expenses.
Asia/Pacific/Africa
Asia/Pacific/Africa’s net sales increased 3.6%, excluding the negative impact of currency translation, during the full year of 2022 compared to 2021. Higher sales in Japan, Australia and Africa, produced the majority of the increase. Income from operations was relatively flat for the full year of 2022 compared to 2021 as the benefit of higher sales and an improved product mix was mostly offset with higher material costs and engineering expense.
Outlook
AGCO’s net sales for 2023 are expected to be approximately $14 billion, reflecting improved sales volumes and pricing partially offset by negative foreign currency translation. Gross and operating margins are projected to improve from 2022 levels, reflecting the impact of higher sales and production volumes as well as pricing to offset cost inflation. These improvements are expected to fund increases in engineering and other technology investments to support AGCO’s precision agriculture and digital initiatives.
