AGCO, the Duluth-based global farm equipment maker, reported a 36 percent increase in net income in the fourth quarter, but the company expects demand for its tractors and other products to soften this year.
The Gwinnett County company beat Wall Street estimates, reporting net income of $139.3 million, or $1.40 a diluted share, in the three months ending in December, compared with $102.5 million, or $1.04 a share, in the same period a year ago.
The average per-share estimate of 17 analysts polled by Thomson Reuters was $1.34.
AGCO’s stock traded lower Tuesday, while shares of some of its major competitors, including Terex, Navistar International and Joy Global, traded higher.
Fourth-quarter sales rose nearly 6 percent to $2.9 billion in the quarter. Sales were strongest in the company’s Europe/Africa/Middle East region, rising 10 percent. Sales in the Asia Pacific region grew 6 percent, while sales in North America were up 2 percent and in South America, 1 percent.
In announcing the results, Chairman Martin Richenhagen said 2014 will be challenging for the company because farmers expect lower commodity prices to reduce their income, which means they will cut spending on new farm equipment. Richenhagen expects modest declines in demand for its sprayer, grain storage and other products across most markets.
The chairman said the company, which generated more than $400 million in free cash flow last year, continued to invest heavily to improve plant productivity, to develop new products and to meet emission requirements.
“Our strong cash generation will allow us to continue making strategic investments in improved technology and production capabilities while returning cash to our shareholders,” Richenhagen said.
The company announced $500 million share repurchase program in December. Stock buybacks can influence the value of shares.
For the year, net income was $597.2 million, or $6.01 a share,, compared with $522.1 million, or $5.30 a share. AGCO said sales for the year grew 8 percent to $10.8 billion.
The company expects per-share earnings for 2014 to be about $6 and sales of $10.8 billion to $11 billion. Analysts per-share earnings of $5.76, and sales of $10.48 billion.
