Sign in

You're signed outSign in or to get full access.

AC

AGCO CORP /DE (AGCO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net sales were $2.05B, down 30.0% year-over-year; adjusted EPS was $0.41 and reported EPS was $0.14; full-year guidance was affirmed .
  • Versus S&P Global consensus, AGCO delivered a significant EPS beat (consensus ~$0.04 vs adjusted $0.41), with revenue essentially in line and EBITDA modestly above consensus; management cited price/mix and cost controls as key positive drivers . Values retrieved from S&P Global.*
  • Operating margin compressed to 2.4% (adjusted 4.1%) on lower volumes and factory under-absorption; progress on dealer inventory reduction and restructuring supports second-half weighting of earnings .
  • 2025 outlook maintained: net sales ~$9.6B, adjusted operating margin 7%–7.5%, EPS $4.00–$4.50; Q2 2025 guidance set at ~$2.5B sales and $1.00–$1.10 EPS .
  • Catalysts: tariff mitigation actions and EU/China tariff clarity; dealer inventory normalization (especially North America) and Brazil demand recovery trajectory .

What Went Well and What Went Wrong

What Went Well

  • Cost actions ahead of plan: “price/mix and costs were a little bit better… about $0.25” benefit to Q1 EPS; below-the-line items added ~$0.20, driving adjusted EPS to $0.41 .
  • Dealer destocking and production discipline: production hours reduced 33% YoY, with progress lowering dealer inventories across regions; Europe near target (<4 months) .
  • Precision ag momentum: PTx Trimble sales “just over $60M” and profitable in Q1; channel coverage tripled; JV tech take-rate ~90% on AGCO products .

What Went Wrong

  • Volume-driven margin compression: operating margin fell to 2.4% (adjusted 4.1%) on factory under-absorption and higher discounts; EME margin declined to ~11.6% on lower volumes .
  • North America weakness: net sales down ~34% YoY, operating margin negative (-5.0%); dealer inventory still elevated (~8.5 months vs 6-month target) .
  • Tariff headwinds: management embeds ~$0.30 EPS headwind; largest exposure to EU-related tariffs and China-sourced components .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$2.60 $2.89 $2.05
Reported EPS ($USD)$0.40 $(3.42) $0.14
Adjusted EPS ($USD)$0.68 $1.97 $0.41
Operating Margin %4.4% (9.3)% 2.4%
Adjusted Operating Margin %5.5% 9.9% 4.1%
Q1 2025 Consensus vs ActualConsensus*Actual
Revenue ($USD Billions)$2.05*$2.05
EPS ($USD)$0.04*$0.41 (adjusted)
EBITDA ($USD Millions)$133.9*$136.0*

Values retrieved from S&P Global.*

Q1 2025 Segment ResultsNet Sales ($USD Millions)Income from Operations ($USD Millions)Operating Margin %
North America395.6 (19.8) (5.0)%
South America229.9 2.1 0.9%
Europe/Middle East1,330.5 154.4 11.6%
Asia/Pacific/Africa94.5 (2.7) (2.9)%
KPIs and Operational MetricsQ1 2025
Replacement Parts Sales ($USD Millions)$433
Production Hours Change YoYDown ~33%
Dealer Inventory – EuropeJust under 4 months (near target)
Dealer Inventory – North America~8.5 months vs 6-month target
Dealer Inventory – South America~4 months vs 3-month target; units down ~7% QoQ
Free Cash Flow (Q1)Used ~$260M
Cash & Equivalents (Mar 31)$562.6M
Net Inventories (Mar 31)$2,958.0M
Long-term Debt (less current)$2,757.5M
Q2 2025 Net Sales Outlook~$2.5B
Q2 2025 EPS Outlook$1.00–$1.10

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025~$9.6B ~$9.6B Maintained
Adjusted Operating MarginFY 20257%–7.5% 7%–7.5% Maintained
EPSFY 2025$4.00–$4.50 $4.00–$4.50 Maintained
Effective Tax RateFY 202530%–35% range ~35% (lower end of range) Narrowed upward to ~35%
Pricing AssumptionsFY 20250%–1% ~1% Raised (upper end)
FX Assumptions vs 2024FY 2025~–3% headwind ~0% impact Raised (less headwind)
Production HoursFY/Q2 2025Down 15%–20%; Q2 down 15%–20% Down 15%–20%; Q2 down 15%–20% Maintained
Q2 Net SalesQ2 2025N/A~$2.5B New
Q2 EPSQ2 2025N/A$1.00–$1.10 New
DividendQuarterly$0.29/share $0.29/share, payable Jun 16, 2025 (record May 15) Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Previous Mentions)Q4 2024 (Previous Mentions)Q1 2025 (Current Period)Trend
Tariffs/MacroSofter demand; precision tech adoption continues 2025 outlook noted tariff uncertainty ~$0.30 EPS headwind; EU and China largest exposures Worsening uncertainty; mitigation actions ongoing
Dealer Inventory/DestockingOngoing cuts to reduce inventories Production hours cut 33%; inventories lower vs 2023 Progress, but NA ~8.5 months vs 6 target; Europe near target; SA ~4 months Improving but unfinished
Production Hours DisciplineNoted cuts amid weakness –33% in Q4 –33% in Q1; FY down 15%–20%; front-loaded Continued aggressive cuts
EME Margins/Brand MixEME margins mid-single digits; Fendt strong EME margin 14.4% Q4 EME margin ~11.6%; flight-to-quality supports Fendt Resilient but lower on volumes
PTx Trimble/Precision AgOutRun autonomy launched; retrofit-first strategy JV consolidated; impairment in NA reporting unit in Q4 ~$60M Q1 sales; profitable; channel tripled; ~90% take-rate Ramping with synergies; watch volume/integration
Brazil DemandRetail tractors –9% YTD 2025 expected flat +11% retail tractors Q1; modest improvement expected Gradual recovery
North America Large AgWeakness across horsepower; margins pressured Large ag down; adjusted margins resilient Sales –34%; margin negative; inventory elevated Deteriorated

Management Commentary

  • “We achieved over $2 billion in net sales… Consolidated operating margins were 2.4% reported and 4.1% adjusted… despite a 33% reduction in production hours… as we look to better align dealer inventories.” — Eric Hansotia .
  • “Price/mix and costs were a little bit better… about $0.25… and below-the-line items were about $0.20… bringing us to $0.41.” — Damon Audia .
  • “We are projecting 2025 production hours between 15% and 20% lower than 2024… plan remains front-loaded and aggressive to get inventory right-sized quickly.” — Eric Hansotia .
  • “PTx Trimble was profitable for us in the quarter… sales just over $60 million… channel readiness tripled… take-rate ~90%.” — Damon Audia and Eric Hansotia .
  • “Our full year net sales outlook is $9.6 billion… EPS $4 to $4.50… Q2 net sales ~$2.5 billion and EPS $1 to $1.10.” — Damon Audia .

Q&A Highlights

  • Drivers of Q1 beat: price/mix and cost control (+$0.25), FX/receivables discounting (+$0.20); production cuts slightly deeper than planned .
  • Tariff mitigation: parts pricing already implemented; equipment pricing contemplated; net sales impact <1%; ~$(0.30) EPS headwind; largest exposure EU, second China components .
  • EME margin sustainability: stable due to subsidies and “flight to quality”; Fendt share gains driven by new products and efficiency .
  • PTx Trimble: Q1 sales just over $60M; profitable; aggressive dealer sign-ups and cross-sell; CNH last-time-buy inventory nearing exhaustion .
  • Capital allocation/buybacks: progress with large shareholder (TAFE) and board seat removal; exploring ways to enable repurchases; specifics pending .
  • Footprint contingency: evaluated potential Fendt production in U.S.; high capital intensity of machining; awaiting stable assumptions before site or integration changes .
  • Cost programs: ~$160M expensed to date; run-rate savings targeted at $100–$125M exiting 2025; exploring acceleration of additional $75M opportunities by 2026 .

Estimates Context

  • EPS: Consensus ~$0.04 vs adjusted $0.41 — significant beat; management highlighted price/mix and cost controls as key drivers . Values retrieved from S&P Global.*
  • Revenue: Consensus ~$2.054B vs actual $2.051B — essentially in line . Values retrieved from S&P Global.*
  • EBITDA: Consensus ~$134M vs actual ~$136M — modest beat. Values retrieved from S&P Global.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS outperformance in a sharply down volume environment underscores effective pricing and cost control — supports confidence in H2-weighted earnings delivery .
  • Watch Q2 cadence: sales ~$2.5B and EPS $1.00–$1.10; continued underproduction vs retail to normalize dealer inventories, especially in North America .
  • Tariff path remains the swing factor; management’s broad-based pricing and supply chain actions aim to offset, but ~$0.30 EPS headwind is embedded — clarity on EU/China exposure could move the stock .
  • Europe remains the profit anchor (EME margin ~11.6%) with Fendt-led mix resilience; any recovery in mid/high horsepower could provide upside .
  • Brazil appears to be turning: +11% retail tractors in Q1 and improving sentiment; positioning and factory readiness to capture upside will be important .
  • Precision ag execution is a strategic lever: PTx Trimble profitability and rising take-rates provide a recurring margin tailwind as volumes normalize .
  • Balance sheet flexibility improved with EIB repayment; dividend maintained at $0.29 — potential for buybacks contingent on shareholder concentration resolution .

Source Documents

  • Q1 2025 8-K 2.02 and press release:
  • Q1 2025 earnings call transcript:
  • Prior quarters: Q4 2024 press release ; Q3 2024 press release .
  • Dividend press release (Q1 period): .