Al Root

The farm-equipment maker AGCO reported better-than-expected first-quarter earnings -- a relief for investors that sent the stock higher.

Thursday, AGCO said it earned 14 cents a share from sales of $2.1 billion, while Wall Street was looking for EPS of 4 cents from sales of $2.1 billion. A year ago, AGCO reported EPS of $2.32 from sales of $2.9 billion.

Sales dipped 30% year over year. U.S. farm income is falling as a result of lower commodity prices, which has weighed on demand for tractors and combines.

Benchmark corn prices have averaged close to $4.50 a bushel over the past year. In 2022 and 2023, prices averaged closer to $6. AGCO earned $15.55 a share in 2023. It earned $7.50 in 2024.

Earnings should be down again in 2025.

AGCO shares were up 5.5% in premarket trading at $89.48, while S&P 500 and Dow Jones Industrial Average futures gained 1.3% and 0.8%, respectively.

"AGCO performed well in the first quarter, which better positions us to navigate global trade uncertainties and continued weak industry demand," said CEO Eric Hansotia in a news release. "We made substantial progress in our cost reduction efforts while reducing inventory by cutting production hours in the quarter by approximately 33% year-over-year....we are seeing a mix of positive signs and risks around the world, requiring us to remain agile as we execute our Farmer-First strategy."

Management still expects sales of $9.6 billion for the year, saying EPS is still likely to land between $4 and $4.50. The guidance reflects "lower sales volumes and assumed actions to mitigate tariff impacts."

The fact that management didn't reduce its calls is also a positive for the stock. Coming into Thursday trading, AGCO stock was down about 6% since the Nov. 5 presidential election.

Results look solid. The absence of new tariff-related effects will help calm investors' nerves while they wait for farmers to make more money when the commodity cycle turns, sending prices higher again.

Write to Al Root at allen.root@dowjones.com

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May 01, 2025 09:28 ET (13:28 GMT)

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