AGCO (NYSE:AGCO) reported second-quarter 2026 net sales of approximately $2.6 billion, down 1% from a year earlier, as softer demand in Europe and Latin America offset stronger North American performance. Adjusted earnings per share rose $0.08 year over year to $1.43, while adjusted operating margin declined 170 basis points to 6.6%.
Chairman, President and CEO Eric Hansotia said the company responded to a more cautious farm-equipment market by aligning production with retail demand, reducing dealer inventories and maintaining controls on operating expenses and working capital. He said farmers remain focused on equipment and technology that can improve productivity, reduce costs and protect yields amid elevated financing and input costs.
Regional Sales Varied Sharply
On a constant-currency basis, second-quarter sales declined 4% overall. Europe-Middle East sales fell about 5%, with relatively solid results in Germany and the United Kingdom partly offsetting weakness in markets including France. North American sales increased about 20%, driven by higher unit volumes in high-horsepower tractors and hay tools, as well as market-share gains.
Latin America was the company’s weakest major region, with sales declining 25% on a constant-currency basis. AGCO said higher production costs and interest rates, tighter credit availability and currency dynamics continued to restrain demand, particularly for larger equipment. Asia-Pacific-Africa sales declined more than 6% excluding currency effects, as stronger Australian sales were offset by lower activity in several Asian and African markets.
Senior Vice President and Chief Financial Officer Damon Audia said North American pricing was “exceptionally strong,” at nearly 3.5% in the quarter. He also attributed market-share gains in the region to momentum in the Fendt and Massey Ferguson brands, high-horsepower tractors, hay equipment and the company’s FarmerCore service initiative.
AGCO said its dealer inventories declined in all three major regions. European inventory fell to about 3.5 months of supply from just under four months in the first quarter, while Latin American inventory also declined to roughly 3.5 months from four months. North American inventories improved to just below seven months of supply, moving toward the company’s six-month target.
Production and Market Outlook Adjusted
AGCO now expects full-year 2026 production hours to be slightly below 2025 levels after moderating output in response to conditions in Latin America and Western Europe. Production hours were up about 6% year to date through June because of a large first-quarter increase off a low base in early 2025, but were slightly lower year over year in the second quarter.
The company updated its equipment-demand outlook in several markets:
- North American large agricultural equipment is still expected to decline about 15% from 2025 levels.
- North American small agricultural equipment is now expected to decline 0% to 5%, reflecting weaker rural-lifestyle customer demand.
- Western European equipment demand is now expected to be approximately flat year over year, revised from a prior expectation for modest growth.
- Brazilian industry demand is now expected to decline 5% to 10%, compared with AGCO’s previous forecast for a 5% decline.
Audia said AGCO expects to underproduce retail demand by about 15% in South America as it continues helping dealers work through aged inventory. In North America, the company also expects to underproduce certain locally manufactured products relative to retail demand while continuing to monitor dealer inventory levels.
Updated Financial Targets and Tariff Costs
AGCO lowered its full-year sales outlook to a range of $10.1 billion to $10.2 billion and projected adjusted earnings per share of $5.50 to $5.75. The company expects an adjusted operating margin of about 7.5%, pricing realization of 2% to 2.5%, and operational-efficiency benefits of $60 million to $70 million in 2026.
The company expects gross tariff-related costs of approximately $115 million for the year. It recorded $22 million in certain IEEPA tariff refunds in the second quarter, reducing the expected net tariff impact to $95 million. Audia said the figure represents a $50 million increase from the prior year and does not include potential future IEEPA refunds.
For the third quarter, AGCO targets net sales of $2.3 billion to $2.4 billion and adjusted earnings per share of $0.85 to $0.90, excluding any potential additional IEEPA tariff refunds.
Year-to-date free cash flow was negative $347 million, compared with positive free cash flow of $63 million in the first half of 2025, primarily because higher production increased inventory and working-capital requirements. AGCO maintained its goal of generating free cash flow equal to roughly 75% to 100% of adjusted net income for the full year.
During the quarter, AGCO repurchased approximately $345 million of shares and declared a regular quarterly dividend of $0.30 per share.
Technology and Precision Agriculture Remain Priorities
Hansotia said AGCO continues to invest in precision agriculture, autonomy and artificial intelligence despite weaker industry demand. The company launched its OutRun mixed-fleet retrofit autonomy solution in Brazil, including for sugarcane applications, and said early customer feedback has been strong.
AGCO’s PTx precision-agriculture business performed approximately in line with management’s expectations during the quarter. Audia said the company expects PTx revenue to be flat to modestly higher than the $860 million generated in 2025. Hansotia said AGCO launched 14 products last year and is on track to introduce another 12 in 2026.
“While the near-term environment remains challenging, the long-term fundamentals of agriculture remain strong,” Hansotia said, citing aging equipment fleets, crop demand and the need for productivity-enhancing technology.
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.
