AGCO Corp. (NYSE: AGCO) reported Q4 EPS of $1.18, $0.51 better than the analyst estimate of $0.67. Revenue for the quarter came in at $2.5 billion versus the consensus estimate of $2.42 billion.

AGCO Corp. sees FY2015 revenue of $8.1-8.3 billion, versus the consensus of $8.47 billion.

“Despite softening market demand in the fourth quarter, we made solid progress with both inventory reduction and our expense savings program,” stated Martin Richenhagen, AGCO’s Chairman, President and Chief Executive Officer. “By lowering production approximately 20% compared to the fourth quarter of 2013, inventories ended the year well below December 31, 2013 levels. We also took steps to adjust our cost structure in response to lower demand and production levels. Our restructuring plan to significantly reduce SG&A and manufacturing support costs is on track to achieve our 2015 targets. Through a combination of layoffs, temporary furloughs, and the dismissal of temporary employees, we lowered our workforce by over 9% from year-ago levels. Our short-term focus will remain on managing working capital, reducing expenses and generating free cash flow while balancing near-term cost reductions with continued investment in longer-term growth initiatives.”

Outlook

Lower commodity prices relative to 2014 are expected to negatively impact farm income, pressuring industry demand across the developed agricultural equipment markets in 2015. Net sales for 2015 are expected to range from $8.1 to $8.3 billion, reflecting the impacts of softer market conditions and unfavorable currency translation. Gross and operating margins are expected to be below 2014 levels due to the negative impact of lower sales and production volumes along with a weaker sales mix. Benefits from the Company’s restructuring and other cost reduction initiatives are expected to partially offset the volume related impacts. Based on these assumptions, 2015 earnings per share are targeted at approximately $3.00, excluding restructuring and other infrequent expenses. In the first quarter of 2015, earnings per share is expected to be significantly lower than reported for the first quarter of 2014 due to lower production levels associated with inventory reduction efforts.

“As we look ahead, we expect weaker end market demand and currency headwinds to make 2015 more challenging than 2014,” continued Mr. Richenhagen. “Despite the market challenges, our priorities remain unchanged, focusing on margin performance and cash generation while providing superior products and services to our customers. When we look beyond 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 long-term growth and improve our financial performance.”

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