“Next year in South America, it looks pretty good,” Chairman and Chief Executive Officer Martin Richenhagen said yesterday in a telephone interview from Agco’s Duluth, Georgia, headquarters. He declined to provide an exact forecast. “Worst case it looks like it being flat.”
Richenhagen’s comments come after Agco saw a 16 percent jump in revenue in the region in the first half of 2013. That pace of expansion isn’t likely to be sustained in 2014 as crop prices are forecast to decline. An increase in interest rates in Brazil may curb sales in 2014, said Joel Tiss, a New York-based analyst for BMO Capital Markets.
“Crop economics are looking a little bit less favorable into next year due to lower costs of soybeans and higher input costs,” Larry De Maria, a New York-based analyst for William Blair & Co., said in a telephone interview.
Agco’s share of the Brazilian tractor market has fallen to 49 percent from 64 percent in 2005, according to data compiled by Bloomberg. Richenhagen said the company is trying to reverse the trend by improving quality and technology and consolidating some smaller dealers.
In North America, “farm income will be pretty strong” in 2013 after a record harvest, he said. “Even if prices are lower, the high tonnage will overcompensate.”
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