Agco Corp.’s quarterly results missed Wall Street expectations for the first time this year, and the company left its full-year forecast unchanged as weaker sales of farm machinery in Europe offset strong sales in North and South America.
Shares of the maker of tractors, harvesters and other agricultural equipment fell as much as 8 percent after the company said it still expects global industry demand to be flat in 2013 from a year earlier.
Analysts said investors were expecting the company to continue its trend of beating analysts’ estimates and boosting its forecast. The company had raised its full-year forecast twice this year.
“Investors had preferred Agco to other farm equipment manufacturers due to perceived short-term earnings momentum benefit,” Wells Fargo Securities analyst Andrew Casey wrote in a client note.
Duluth, Ga.-based Agco reported sales rose 8 percent to $2.48 billion but missed the average analyst estimate of $2.53 billion.
Agco has performed better than its rivals so far this year. While Deere & Co., the world's largest maker of agricultural equipment, warned in August that a cooler-than-normal spring in North America and low corn prices would hit sales, Agco gave no such indication.
However, economic uncertainty in Europe, coupled with a slowdown in demand from U.S. farmers, is threatening to weigh on Agco as corn prices continue to slide, pressured by a record corn crop this year.
Lower prices could mean a drop in total farm cash receipts, if higher yields don’t make up for lower prices.
Agco, which sells its products under the Massey Ferguson, Fendt, Valtra and Agco brand names, said Tuesday that while it expects strong growth in South America in 2013, growth in North America is expected to be modest.
Orders in North America “are down a little, but not substantially down,” a company executive said on a post-earnings conference call.
Agco also said it expects softer demand in Western Europe, with weakness in the U.K. and central and eastern Europe.
The company – which traces its roots back to Allis-Chalmers Manufacturing Co., whose bright orange tractors were once a fixture of the rural American landscape – said it expects sales in the range of $10.8 billion to $11.0 billion in 2013.
Analysts on average were expecting sales of $10.89 billion, according to Thomson Reuters I/B/E/S.