AGCO, the Duluth-based farm equipment maker, reported a drop in sales and net income for the second quarter as farmers ordered less equipment due to soft commodity prices.
While the company said it expected farm production to increase in the months ahead, it was lowering its profitability outlook for the year. The report sent the tractor maker’s stock nearly 5 percent lower Tuesday.
AGCO’s brands include Massey Ferguson, Challenger, Fendt, Valtra and GSI.
In releasing the earnings report, Martin Richenhagen, the company’s chairman, president and chief executive officer, said business softened in North America and Europe and remained weak in South America during the quarter
For the remainder of the year, the company said it will continue to cut equipment production, manage inventory and reduce operating expenses to offset the drop in business. AGCO said it will also increase emphasis on new equipment with advanced technologies.
“The short-term cost reduction actions and production cuts should see us through the current market softness, while our strategic investments should position us for profitable growth as market conditions improve,” Richenhagen said in a statement.
Second-quarter sales dropped about 10 percent to $2.8 billion, while per-share income fell 21 percent to $1.77.
Tractor sales were down 2 percent in North America, 6 percent in western Europe and 18 percent in South America, the company said. Sales of combines were down 4 percent in Western Europe, 15 percent in North America and 25 percent in South America.
On the New York Stock Exchange, AGCO closed at $49.59, down $2.44, or 4.69 percent.
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