Agco Corp. (AGCO, Financial) filed Quarterly Report for the period ended 2012-09-30.
Agco Corp has a market cap of $4.63 billion; its shares were traded at around $45.25 with a P/E ratio of 8.5 and P/S ratio of 0.5. Agco Corp had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Agco Corp the business predictability rank of 3-star.
Regionally, net sales in North America increased during the three and nine months ended September 30, 2012 compared to the same periods in 2011 as a result of our acquisition of GSI Holdings Corp. and improved industry demand. The most significant increases in sales, excluding acquisitions, were in high horsepower tractors, sprayers and hay equipment. The recent drought in the United States has negatively impacted sales in our grain storage and protein production businesses in North America. In the EAME region, excluding the negative impact of foreign currency, net sales increased in the three and nine months ended September 30, 2012 compared to the same periods in 2011 as a result of increased sales in Germany, France, the United Kingdom and Russia, partially offset by declines in certain Southern European markets and Finland. Excluding the negative impact of foreign currency translation, net sales in South America increased during the three and nine months ended September 30, 2012 primarily due to higher sales of high horsepower tractors and combines in Brazil, along with the positive impact of acquisitions. In the Asia/Pacific segment, net sales increased in the three and nine months ended September 30, 2012 compared to the same periods in 2011 primarily as a result of sales growth in Australia, New Zealand and China and the positive impact of acquisitions. We estimate that worldwide average price increases during the three and nine months ended September 30, 2012 were approximately 3.5% and 3.3%, respectively. Consolidated net sales of tractors and combines, which comprised approximately 64% of our net sales in the three and nine months ended September 30, 2012, decreased approximately 5% in the three months ended September 30, 2012 and increased approximately 1% in the first nine months of 2012, compared to the same periods in 2011. Unit sales of tractors and combines decreased approximately 4% and increased approximately 2% during the three and nine months ended September 30, 2012, respectively, compared to the same periods in 2011. The difference between the unit sales increase or decrease and the increase in net sales was primarily the result of foreign currency translation, pricing and sales mix changes.
Other expense, net was $13.8 million and $24.3 million for the three and nine months ended September 30, 2012, respectively, compared to $7.1 million and $17.3 million for the same periods in 2011, respectively. Losses on sales of receivables, related to our accounts receivable sales agreements with AGCO Finance in North America and Europe, were $5.8 million and $16.4 million for the three and nine months ended September 30, 2012, respectively, compared to $6.1 million and $13.5 million for the comparable periods in 2011, respectively. Approximately $0.8 million and $2.1 million of the losses on sales of receivables during the three and nine months ended September 30, 2011, respectively, were included within “Interest expense, net.”
Our AGCO Finance retail finance joint ventures provide retail financing to end customers and wholesale financing to our dealers in the United States, Canada, Germany, France, the United Kingdom, Austria, Ireland, the Netherlands, Denmark, Italy, Sweden, Brazil, Argentina and Australia. The joint ventures are owned 49% by AGCO and 51% by a wholly-owned subsidiary of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”), a financial institution based in the Netherlands. The majority of the assets of the retail finance joint ventures represent finance receivables. The majority of the liabilities represent notes payable and accrued interest. Under the various joint venture agreements, Rabobank or its affiliates are obligated to provide financing to the joint venture companies, primarily through lines of credit. We do not guarantee the debt obligations of the joint ventures. As of September 30, 2012, our capital investment in the retail finance joint ventures, which is included in “Investment in affiliates” on our Condensed Consolidated Balance Sheets, was approximately $345.4 million compared to $322.2 million as of December 31, 2011. The total finance portfolio in our retail finance joint ventures was approximately $8.0 billion and $7.5 billion as of September 30, 2012 and December 31, 2011, respectively. The total finance portfolio as of September 30, 2012 included approximately $6.8 billion of retail receivables and $1.2 billion of wholesale receivables from AGCO dealers. The total finance portfolio as of December 31, 2011 included approximately $6.4 billion of retail receivables and $1.1 billion of wholesale receivables from AGCO dealers. The wholesale receivables were either sold directly to AGCO Finance without recourse from our operating companies or AGCO Finance provided the financing directly to the dealers. For the nine months ended September 30, 2012, our share in the earnings of the retail finance joint ventures, included in “Equity in net earnings of affiliates” on our Condensed Consolidated Statements of Operations, was $35.8 million compared to $32.9 million for the same period in 2011.
Our working capital requirements are seasonal, with investments in working capital typically building in the first half of the year and then reducing in the second half of the year. We had $1,702.4 million in working capital at September 30, 2012, as compared with $1,457.3 million at December 31, 2011 and $1,323.0 million at September 30, 2011. Accounts receivable and inventories, combined, at September 30, 2012 were $548.7 million higher than at December 31, 2011 and $596.4 million higher than at September 30, 2011. The increase in accounts receivable and inventories during the first nine months of 2012 was a result of our recent acquisitions and net sales growth, as well as the items discussed above.
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Agco Corp has a market cap of $4.63 billion; its shares were traded at around $45.25 with a P/E ratio of 8.5 and P/S ratio of 0.5. Agco Corp had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Agco Corp the business predictability rank of 3-star.
Highlight of Business Operations:
Net sales for the three months ended September 30, 2012 were $2,295.0 million compared to $2,099.1 million for the same period in 2011. Net sales for the first nine months of 2012 were $7,258.8 million compared to $6,255.4 million for the same period in 2011. Acquisitions positively impacted net sales by approximately $218.2 million, or 10.4%, in the three months ended September 30, 2012 and by $673.4 million, or 10.8%, in the first nine months of 2012. Foreign currency translation negatively impacted net sales by approximately $231.0 million, or 11.0%, in the three months ended September 30, 2012 and by $572.6 million, or 9.2%, in the first nine months of 2012.Regionally, net sales in North America increased during the three and nine months ended September 30, 2012 compared to the same periods in 2011 as a result of our acquisition of GSI Holdings Corp. and improved industry demand. The most significant increases in sales, excluding acquisitions, were in high horsepower tractors, sprayers and hay equipment. The recent drought in the United States has negatively impacted sales in our grain storage and protein production businesses in North America. In the EAME region, excluding the negative impact of foreign currency, net sales increased in the three and nine months ended September 30, 2012 compared to the same periods in 2011 as a result of increased sales in Germany, France, the United Kingdom and Russia, partially offset by declines in certain Southern European markets and Finland. Excluding the negative impact of foreign currency translation, net sales in South America increased during the three and nine months ended September 30, 2012 primarily due to higher sales of high horsepower tractors and combines in Brazil, along with the positive impact of acquisitions. In the Asia/Pacific segment, net sales increased in the three and nine months ended September 30, 2012 compared to the same periods in 2011 primarily as a result of sales growth in Australia, New Zealand and China and the positive impact of acquisitions. We estimate that worldwide average price increases during the three and nine months ended September 30, 2012 were approximately 3.5% and 3.3%, respectively. Consolidated net sales of tractors and combines, which comprised approximately 64% of our net sales in the three and nine months ended September 30, 2012, decreased approximately 5% in the three months ended September 30, 2012 and increased approximately 1% in the first nine months of 2012, compared to the same periods in 2011. Unit sales of tractors and combines decreased approximately 4% and increased approximately 2% during the three and nine months ended September 30, 2012, respectively, compared to the same periods in 2011. The difference between the unit sales increase or decrease and the increase in net sales was primarily the result of foreign currency translation, pricing and sales mix changes.
Other expense, net was $13.8 million and $24.3 million for the three and nine months ended September 30, 2012, respectively, compared to $7.1 million and $17.3 million for the same periods in 2011, respectively. Losses on sales of receivables, related to our accounts receivable sales agreements with AGCO Finance in North America and Europe, were $5.8 million and $16.4 million for the three and nine months ended September 30, 2012, respectively, compared to $6.1 million and $13.5 million for the comparable periods in 2011, respectively. Approximately $0.8 million and $2.1 million of the losses on sales of receivables during the three and nine months ended September 30, 2011, respectively, were included within “Interest expense, net.”
Our AGCO Finance retail finance joint ventures provide retail financing to end customers and wholesale financing to our dealers in the United States, Canada, Germany, France, the United Kingdom, Austria, Ireland, the Netherlands, Denmark, Italy, Sweden, Brazil, Argentina and Australia. The joint ventures are owned 49% by AGCO and 51% by a wholly-owned subsidiary of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”), a financial institution based in the Netherlands. The majority of the assets of the retail finance joint ventures represent finance receivables. The majority of the liabilities represent notes payable and accrued interest. Under the various joint venture agreements, Rabobank or its affiliates are obligated to provide financing to the joint venture companies, primarily through lines of credit. We do not guarantee the debt obligations of the joint ventures. As of September 30, 2012, our capital investment in the retail finance joint ventures, which is included in “Investment in affiliates” on our Condensed Consolidated Balance Sheets, was approximately $345.4 million compared to $322.2 million as of December 31, 2011. The total finance portfolio in our retail finance joint ventures was approximately $8.0 billion and $7.5 billion as of September 30, 2012 and December 31, 2011, respectively. The total finance portfolio as of September 30, 2012 included approximately $6.8 billion of retail receivables and $1.2 billion of wholesale receivables from AGCO dealers. The total finance portfolio as of December 31, 2011 included approximately $6.4 billion of retail receivables and $1.1 billion of wholesale receivables from AGCO dealers. The wholesale receivables were either sold directly to AGCO Finance without recourse from our operating companies or AGCO Finance provided the financing directly to the dealers. For the nine months ended September 30, 2012, our share in the earnings of the retail finance joint ventures, included in “Equity in net earnings of affiliates” on our Condensed Consolidated Statements of Operations, was $35.8 million compared to $32.9 million for the same period in 2011.
Our working capital requirements are seasonal, with investments in working capital typically building in the first half of the year and then reducing in the second half of the year. We had $1,702.4 million in working capital at September 30, 2012, as compared with $1,457.3 million at December 31, 2011 and $1,323.0 million at September 30, 2011. Accounts receivable and inventories, combined, at September 30, 2012 were $548.7 million higher than at December 31, 2011 and $596.4 million higher than at September 30, 2011. The increase in accounts receivable and inventories during the first nine months of 2012 was a result of our recent acquisitions and net sales growth, as well as the items discussed above.
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