Massey Tractors Release Doubled Q4 Profits

Agco, the owner and manufacturer of massey tractors, reported that it doubled its fourth quarter profits in 2010, but the firm does not have the same hopes for 2011. Agco, based in Duluth, owns the Challenger and massey ferguson tractors brands, and said the increased profits were down to bountiful harvests and high commodity prices.

Agco reported an overall fourth-quarter profit of $85.2 million, or 87 cents a share, up from $33.5 million, or 35 cents a share, a year earlier. Net sales for the last quarter rose 18.7 percent, versus the fourth quarter of 2009, to $2.2 billion. Sales for all of 2010 rose nearly 6 percent to almost $7 billion.

Market conditions, including unusually good harvests and high commodity prices filled the pockets of U.S. and foreign farmers, which was money then spent at the local tractor or combine dealer, to Agco's benefit.

Agco’s North American sales, for example, rose 47.3 percent the last quarter versus a year earlier. The world’s third-largest farm machinery maker, behind Deere and CNH Global, reported sales in Europe, the Middle East and Africa rose 29 percent during the same time frame. South American sales were tepid, particularly in Brazil and Argentina.

Good harvests and prices in Brazil and Western Europe are expected to boost revenue slightly. Agco predicts sales of massey tractors across the North American market will flatten in 2011.

"We do expect most of the earnings improvement in the first half of the year and then level out to some extent," chief financial officer Andy Beck said during a conference call Tuesday. "The thing that could be a question is the additional expenses and engineering expenses we expect in the second half" of the year.

The company predicts this year’s earnings will be $2.50 to $2.75 per share on $7.6 billion to $7.9 billion in sales.