AGCO Q3 2026 Sales Fall 8.6% as Regional Weakness Weighs

AGCO Corp. (NYSE: AGCO) reported lower third-quarter 2026 sales and operating profit as weaker demand in Europe/Middle East and Latin America outweighed growth in North America and Asia/Pacific/Africa. The agricultural equipment maker projected full-year production about 5% below 2025 levels and set its 2026 outlook at $9.8 billion to $10.0 billion in net sales and approximately $5.50 in adjusted earnings per share.

Net sales for the quarter ended September 30 fell 8.6% year over year to $2.26 billion. Excluding currency translation, sales declined 8.7%. Gross margin narrowed by 110 basis points to 25.0%, while reported operating income dropped 23.4% to $116.1 million. Operating margin decreased to 5.1% from 6.1%.

Adjusted operating income, a non-GAAP measure, fell 25.9% to $137.0 million, and adjusted operating margin contracted by 140 basis points to 6.1%. Diluted adjusted earnings were $1.05 per share, compared with $1.35 a year earlier.

Reported diluted earnings declined to $0.75 per share from $4.09. The prior-year figure included a $219.2 million after-tax gain on the sale of an investment in an affiliate. Third-quarter 2026 adjustments included restructuring and business optimization expenses and amortization of acquired PTx Trimble intangible assets.

Regional performance diverges

North American sales increased 34.8% to $485.3 million, or 35.1% excluding currency translation. Asia/Pacific/Africa sales rose 13.8% to $178.8 million and were up 9.2% on a currency-neutral basis.

Those gains were more than offset by Europe/Middle East, AGCO’s largest region during the quarter, where sales fell 19.1% to $1.31 billion, or 18.1% excluding currency effects. Latin American sales decreased 15.4% to $292.3 million and declined 19.1% excluding currency translation.

AGCO’s third-quarter production hours were 19% below the prior-year period. The company expects full-year production to be approximately 5% lower than in 2025 as it continues dealer inventory destocking amid declining global demand.

Industry conditions remained weak through September. Tractor retail units were down 9% in North America, 1% in Brazil and 17% in Western Europe, excluding compact tractors in North America. Combine retail units declined 10%, 2% and 38%, respectively.

For the first nine months, AGCO’s net sales rose 0.7% to $7.22 billion, helped by a 3.4% positive currency translation impact. Excluding that impact, sales declined 2.7%. Adjusted operating income fell 14.4% to $416.0 million, while adjusted operating margin narrowed to 5.8% from 6.8%. Diluted adjusted earnings increased to $3.42 per share from $3.11.

Cash flow and 2026 outlook

AGCO used $380.6 million of free cash flow during the first nine months, compared with generating $65.2 million in the same period of 2025. Management said working capital is expected to be the primary source of cash by year-end and confirmed its full-year free cash flow target of approximately $300 million. The company is targeting free cash flow conversion of 75% to 100%.

AGCO repurchased $57 million of shares in the third quarter and $402 million through the first nine months of 2026. Its quarterly dividend was $0.30 per share.

The company’s 2026 assumptions include an adjusted operating margin of approximately 7.0%, engineering expense of about 5% of sales, capital expenditure of $250 million to $300 million and an effective tax rate of 31% to 33%. The outlook also incorporates pricing of 1.5% to 2.0%, a roughly 1% positive foreign-currency impact, market-share gains, further dealer inventory reductions, and estimated tariff costs and mitigation actions.

AGCO estimated 2026 North American industry tractor sales, excluding compact tractors, at 82,000 units, with large agricultural equipment down about 15% and small agricultural equipment down about 5%. It projected Brazil at 47,000 units, down approximately 15%, and Western Europe at 117,000 units, ranging from flat to down 5%.

Management continues to emphasize its Farmer-First strategy, including PTx mixed-fleet precision technology, FarmerCore mobile and on-farm service offerings, and technology spanning planning, planting, application and harvesting.

The outlook remains exposed to weaker agricultural demand, tariffs, inflation, supply-chain disruptions, weather and commodity prices. AGCO also cited risks related to integrating PTx Trimble, delivering new precision-agriculture products on schedule and within budget, competitive pricing, geopolitical conflicts, foreign-exchange movements and the execution of expansion and modernization plans.