AGCO (NYSE:AGCO) executives told investors the company finished 2025 with “another strong quarter,” pointing to resilient margins, disciplined production levels, and continued momentum in precision agriculture despite what management described as a soft demand environment across major equipment markets.
Fourth-quarter results and full-year performance
Chairman, President, and CEO Eric Hansotia said AGCO delivered a fourth-quarter adjusted operating margin of 10.1% on net sales of $2.9 billion, which he said were up 1% year-over-year (or nearly 4% excluding the divested Grain and Protein business). For the full year, Hansotia reported an adjusted operating margin of 7.7% and adjusted earnings per share of $5.28 on sales of $10.1 billion. He characterized the full-year comparison as a 13.5% decrease versus 2024 (or 7% lower excluding Grain and Protein).
Regional sales and margin commentary
On regional performance for the fourth quarter (excluding favorable currency translation and excluding $75 million of Grain and Protein sales in the prior-year quarter), Audia outlined the following trends:
- Europe, Middle East: Net sales down 1%, with lower tractor sales partially offset by better hay tool performance. Germany and the U.K. were cited as offsets to weakness across many Western European markets.
- South America: Net sales down 9%, reflecting moderate industry demand; lower tractor and implement sales were partially offset by combine growth.
- North America: Net sales down 9%, driven by moderated demand and “deliberate production discipline” to normalize dealer inventories; sprayers and mid-range tractors accounted for most of the decline.
- Asia Pacific Africa: Net sales up 3%, with higher sales in Australia partially offset by lower sales across several Asian markets.
- Replacement parts: Fourth-quarter parts sales were $440 million, up 5% reported (down 1% excluding currency). Full-year parts revenue was $1.9 billion, up 2% reported and flat excluding currency.
In profitability, Audia said North America remained below breakeven in the quarter, with operating income down $33 million year-over-year due to lower volumes and under-absorption tied to production cuts of “over 50%,” which he said were aligned with dealer inventory normalization. South America operating income fell by $21 million with margins nearing 3%, reflecting lower sales and higher engineering expense, while Asia Pacific Africa posted relatively flat operating income with operating margins near 8%.
Production discipline and dealer inventory positioning
Hansotia emphasized that AGCO operated at “intentionally low production levels” during the year and ended 2025 with “significantly lower company and dealer inventories compared to 2024.” Management provided regional dealer inventory levels and targets:
- Europe: Approximately four months of supply, aligned with the company’s target.
- South America: About five months of supply, above the company’s three-month target, reflecting lower forward sales expectations that evolved during the fourth quarter.
- North America: Seven months of supply at year-end, down from eight months at the end of the third quarter and still above the company’s six-month target. Hansotia said dealer inventory units fell more than 30% for the full year and more than 9% during the fourth quarter.
In Q&A, management said additional rightsizing is expected in the U.S. channel, with underproduction “likely in the first half” of 2026 in North America, and an underproduction estimate around 10% as it works toward the six-month target.
Precision ag momentum and product launches
Hansotia said the PTx business continued to build momentum in 2025, including 14 new products introduced “across the crop cycle.” He also said AGCO ended the year with “more than 70 global PTx elite dealers,” more than doubling from the start of the year. He described the network as a differentiator due to its retrofit focus and mixed-fleet compatibility, supported by a broader footprint that includes AGCO equipment dealers, CNH dealers, and OEM customers.
From the company’s 2026 PTx Winter Conference, Hansotia highlighted three technologies discussed on the call:
- SymphonyVision and SymphonyVision Duo, described as vision-based spray technology and a dual-nozzle system intended to support spot spraying and variable-rate application in a single pass. Hansotia cited “60% chemical and cost savings” for the underlying technology and said the product model does not include per-acre recurring fees.
- ArrowTube, a seed delivery system intended to improve seed orientation at placement to support more uniform emergence and potential yield benefits.
- FarmENGAGE, a farmer-facing digital platform integrating connectivity, agronomic insights, and task management. Hansotia said it will be included in all model year 2026 Fendt and Massey Ferguson machines sold in North America.
Audia later provided a revenue figure for PTx, stating the business finished 2025 at approximately $860 million and that the company expects 2026 PTx revenue to be “flat to modestly up” versus that level, with retrofit demand expected to hold up better than equipment demand.
Cash flow, capital returns, and 2026 guidance
Audia said AGCO generated record free cash flow of $740 million in 2025, up more than $440 million versus 2024, citing working capital execution, higher fourth-quarter sales, and lower capital expenditures. He said AGCO repurchased $250 million of shares in the fourth quarter under a $1 billion authorization and paid a regular quarterly dividend of $0.29 per share, totaling approximately $87 million for 2025.
For 2026, management expects global industry demand to be relatively flat versus 2025, with the industry moving from about 86% of mid-cycle to around 87%. The company’s full-year outlook includes:
- Net sales: $10.4 billion to $10.7 billion
- Adjusted operating margin: 7.5% to 8%
- Adjusted EPS: $5.50 to $6.00
- Capital expenditures: approximately $350 million
- Free cash flow conversion: 75% to 100% of adjusted net income
- Q1 2026 EPS: $0.40 to $0.45, with net sales “modestly up” year-over-year
Audia said pricing is expected to be 2% to 3% in 2026, but described the pricing outlook as margin-dilutive given material inflation and tariffs. He quantified tariff costs as a roughly $65 million incremental headwind in 2026 versus 2025, with total 2026 tariff costs around $105 million to $110 million, and said the incremental impact would be weighted more heavily to the first half of the year.
On costs, management said AGCO achieved $65 million of bottom-line savings in 2025 and expects an additional $40 million to $60 million of incremental savings in 2026, with much of the savings described as coming through SG&A as the company standardizes and simplifies processes, shifts work to lower-cost options, and applies automation and AI.
Looking at regional margin cadence, Audia said Europe is expected to remain around a 15% operating margin in 2026, while North America is expected to be negative for the first two to three quarters as the company underproduces, and could be negative for the full year depending on market conditions.
About AGCO (NYSE:AGCO)
AGCO Corporation is a global leader in the design, manufacture and distribution of agricultural machinery and precision farming solutions. Headquartered in Duluth, Georgia, the company markets a diverse portfolio of well-known brands, including Massey Ferguson, Fendt, Challenger, Valtra and GSI, serving farmers and producers in North America, South America, Europe, the Middle East, Africa and Asia Pacific. Through an extensive dealer network, AGCO provides equipment tailored to a broad range of crop and livestock operations.
The company’s product offerings span tractors, combine harvesters, hay and forage tools, application equipment, seeding and tillage implements, as well as grain storage and protein solutions.
