DULUTH, GEORGIA, US — Strong global industry demand spurred a 14% increase in net sales and 34% gain in net income for AGCO the year ended Dec. 31, 2023.

The company posted net income of $1.17 billion for 2023, which compared with $874 million in 2022. Net sales were $14.4 billion in 2023, up from $12.6 billion in the previous year.

“AGCO delivered record results in 2023 highlighted by significantly higher net sales and operating margins due to the continued execution of our Farmer-First strategy and healthy global industry demand,” said Eric Hansotia, chairman, president and chief executive officer of AGCO. “Driven by our high margin growth initiatives of globalizing a full line of our Fendt branded products, precision ag business and expanding our parts and service business, net sales outgrew the market and full year adjusted operating margins reached a record high at 12% of net sales. We also continued to increase our technology development efforts with engineering expense up over 23% in 2023 compared to 2022 and up over 60% compared to 2020. These levels of higher investments are producing increased technology patents for AGCO, award-winning value-enhancing products for our farmers and record financial results for our shareholders.”

For the fourth quarter, AGCO posted net sales of $3.8 billion, a decrease of 2.5% compared with the same quarter in 2022. Net income for the quarter was $339 million, up from $322.2 million a year earlier.

Hansotia said the company will remain focused on its primary growth initiatives in 2024, which will mitigate some of the softening of industry demand.

“More challenging global market conditions are expected in 2024 due to reduced commodity prices and modestly lower farm income expectations,” he said. “Despite a lower sales forecast, we expect higher and more resilient margins compared to past cycles due to structural improvements in our business. We will continue to accelerate investments in premium technology, smart farming solutions and enhanced digital capabilities to support our Farmer-First strategy while helping to sustainably feed the world.”

Near record global crop production in 2023 increased grain inventories and prices have retreated from high levels seen the last two years, Hansotia said. Farm income was down modestly in 2023 and another modest decline is expected in 2024, he said.

AGCO’s net sales for 2024 are expected to be approximately $13.6 billion, reflecting lower sales volumes, modest positive pricing as well as favorable foreign currency translation. Operating margins are projected to be approximately 11%, reflecting the impact of lower sales, lower production volumes and relatively flat investments in engineering and other technology efforts to support AGCO’s precision agriculture and digital initiatives. Based on these assumptions, 2024 earnings per share are targeted at approximately $13.15.

AGCO’s net sales in North America increased 18% for the year. Income increased $180.5 million compared to 2022. The improvement was the result of positive net pricing and favorable product mix, partially offset by higher selling, general, and administrative expenses and engineering expenses.

In South America, net sales increased 2.6% for the full year with increases in Brazil partially offset by lower sales in Argentina.

Despite significant discounting in the fourth quarter, income from operations for the full year of 2023 increased by $12.5 million compared with 2022. This increase was primarily a result of positive net pricing, partially offset by lower sales volume and considerable dealer termination charges.

Net sales in the Europe/Middle East region increased 17% for the full year of 2023 compared to 2022, excluding negative currency translation impacts.

Healthy growth across the major European markets contributed to the improvement. Positive pricing and increased sales of mid-range and high-horsepower tractors as well as replacement parts produced most of the growth. Income from operations increased by $316.5 million for the full year of 2023.