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Duluth-based Agco Corp. posts drop in profit

LAWRENCEVILLE - Farm equipment maker Agco Corp. posted a 20 percent drop in its quarterly profit, citing severe market decline in the South American market.

In its third-quarter earnings released Wednesday, the Duluth-based company said its net income fell to $27.8 million, or 31 cents a share. The results were below the roughly 33 cents per share analysts expected. Agco posted a $34.8 million profit, or 36 cents per share, in the third quarter a year ago.

Third-quarter sales were $1.23 billion, also slightly below analysts' expectations. In South America, tractors sales have fallen 22 percent though the first nine months of the year, and combines 64 percent. Operating income in South America suffered because of lower production, an unfavorable sales mix and continued strengthening of Brazilian currency, Agco said.

For the first nine months of 2005, net income was $1.01 per share, compared to $1.18 per share in the same period last year.

In a prepared statement, AGCO CEO Martin Richenhagen said "market conditions in South America and Western Europe have softened further in the third quarter, which we believe will extend for the balance of the year."

Dry weather in parts of North America have also reduced demand, Richenhagen said.

AGCO said it's adjusting production in the fourth quarter and lowered earnings estimates for the rest of the year.