AGCO Corp. (NYSE: AGCO) reported Q1 EPS of $2.00, $0.87 better than the analyst estimate of $1.13. Revenue for the quarter came in at $2.38 billion versus the consensus estimate of $2.22 billion.

“AGCO continued its strong operational performance in the first quarter and set records for first quarter operating income and earnings per share,” stated Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer. “Favorable market demand and positive market response to our technology-focused products helped produce sales growth and margin expansion across all regions. Outstanding execution from our team allowed us to minimize the impact of ongoing supply constraints, and an improved pricing environment helped offset material and freight cost inflation. Healthy farm fundamentals are driving robust replacement demand and our order boards remain well ahead of last year. With increased visibility for the coming quarters, we have raised our net sales and earnings forecast for 2021 while enabling continued investment in our premium technology, smart farming solutions and enhanced digital capabilities.”

“The ongoing economic recovery from the COVID-19 pandemic is putting pressure on global grain inventories which are well below last year’s levels,” stated Mr. Hansotia. “As a result, prices of soft commodity are supporting more favorable farm economics as well as increased demand for machinery. These improved conditions are expected to generate industry growth across all the major markets in 2021.”

“North American industry retail sales increased in the first three months of 2021 compared to the same period in 2020,” continued Mr. Hansotia. “Sales of low horsepower tractors moved above prior peak levels while demand for high horsepower tractors also improved. With the fleet age remaining extended, industry retail sales of North America large agricultural equipment grew approximately 12% in the first quarter. Industry retail sales in Western Europe also increased in the first quarter of 2021 with growth across nearly all major markets. With higher wheat, dairy and livestock prices projecting favorable farm economics, farmer sentiment is expected to remain strong in Western Europe, supporting increased equipment demand in 2021. In South America, industry sales increased during the first three months of 2021 driven by improved demand in both Brazil and Argentina as well as recovery in the smaller export markets. A healthy first crop as well as favorable exchange rates are supporting positive economic conditions for farmers who continue to replace an aged fleet. Our long-term global view remains positive. Increasing demand for commodities, driven by the growing world population, as well as rising emerging market protein consumption and biofuel use, are expected to support elevated farm income and healthy conditions in our industry.”

GUIDANCE:

AGCO Corp. sees FY2021 EPS of $8.40-$8.60, versus the consensus of $7.35. AGCO Corp. sees FY2021 revenue of $10.6-10.8 billion, versus the consensus of $10.28 billion.

The health, safety and well-being of all AGCO employees, dealers and farmer customers continues to be AGCO’s top priority during the COVID-19 pandemic. The following outlook does not contemplate any further sales or production disruptions caused by the pandemic.

AGCO’s net sales for 2021 are expected to range from $10.6 billion to $10.8 billion, reflecting improved sales volumes, pricing and positive foreign currency translation. Gross and operating margins are projected to improve from 2020 levels, reflecting the impact of higher sales and production volumes as well as margin improvement initiatives. These improvements are planned to fund increases in engineering and other technology investments to support AGCO’s precision agriculture and digital initiatives. Based on these assumptions, 2021 earnings per share is targeted in a range from $8.40 to $8.60.

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