FULL YEAR: AGCO'S SALES DOWN 1%, EARNINGS DOWN 36%
Feb. 8, 2017
Source: AGCO news release
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AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.1 billion for the fourth quarter of 2016, an increase of approximately 6.9% compared to net sales of approximately $2.0 billion for the fourth quarter of 2015. Reported net income was $0.77 per share and adjusted net income, which excludes restructuring expenses, was $0.84 per share for the fourth quarter of 2016.
These results compare to reported net income of $0.73 per share and adjusted net income, which excludes restructuring expenses, of $0.80 per share for the fourth quarter of 2015. Excluding unfavorable currency translation impacts of approximately 1.8%, net sales in the fourth quarter of 2016 increased approximately 8.7% compared to the fourth quarter of 2015.
Net sales for the full year of 2016 were approximately $7.4 billion, a decrease of approximately 0.8% compared to 2015. Excluding the unfavorable impact of currency translation of approximately 2.6%, net sales for the full year of 2016 increased approximately 1.9% compared to 2015.
For the full year of 2016, reported net income was $1.96 per share and adjusted net income, which excludes restructuring expenses and a non-cash deferred income tax adjustment, was $2.47 per share. These results compare to reported net income of $3.06 per share and adjusted net income, which excludes restructuring expenses, of $3.24 per share for the full year of 2015.
Reported fourth quarter regional sales results:
*Europe/Africa/Middle East ("EAME") (2.0)%, North America +3.0%, South America +63.6%, Asia/Pacific ("APAC") +21.8%
Constant currency fourth quarter regional sales results: EAME +1.8%, North America +4.4%, South America +53.9%, APAC +22.7%
*Generated $370 million in cash flow from operations and $168 million in free cash flow in 2016
*Share repurchase program resulted in reduction of 4.4 million shares during 2016
*New $300 million share repurchase program authorized through December 2019
*Quarterly dividend increased to $0.14 per share effective first quarter 2017
*Full-year earnings per share forecast for 2017 remains at approximately $2.50
"The past year was a challenging year due to continued weakening global market demand for agricultural equipment," stated Martin Richenhagen, AGCO's Chairman, President and Chief Executive Officer. "Despite these difficult conditions, our solid operational execution during 2016 allowed us to exceed our financial targets and be well-positioned to seek new opportunities for growth.
"Looking forward to 2017, industry conditions are expected to remain near the bottom of the agricultural equipment cycle in key markets. In response to the industry challenges, our focus continues to be on cost and expense reduction through globalizing processes, reducing complexity and better leveraging scale. In addition to diligent cost management, we will continue to make long-term investments to raise the efficiency of our factories, improve our service levels and strengthen our product offering."
Softer industry demand is anticipated across North America and Europe, partially offset by growth in South America. AGCO's net sales for 2017 are expected to reach approximately $7.4 billion. Gross and operating margins are expected to improve from 2016 levels, reflecting the positive impact of pricing and cost reduction efforts partially offset by a weaker sales mix. Based on these assumptions, 2017 earnings per share is targeted to be approximately $2.50.