AGCO, Your Agriculture Company, a worldwide manufacturer and distributor of agricultural equipment and solutions, reported net sales of approximately $2.2 billion for the third quarter of 2018, an increase of approximately 11.5% compared to the third quarter of 2017. Reported net income was $0.89 per share for the third quarter of 2018, and adjusted net income, excluding restructuring expenses, was $0.91 per share. These results compare to a reported net income of $0.76 per share and adjusted net income, excluding restructuring expenses, of $0.79 per share for the third quarter of 2017. Excluding unfavorable currency translation impacts of approximately 5.9%, net sales in the third quarter of 2018 increased approximately 17.4% compared to the third quarter of 2017.

Net sales for the first nine months of 2018 were approximately $6.8 billion, an increase of approximately 17.0% compared to the same period in 2017. Excluding favorable currency translation impacts of approximately 1.8%, net sales for the first nine months of 2018 increased approximately 15.1% compared to the same period in 2017. For the first nine months of 2018, reported net income was $2.33 per share, and adjusted net income, excluding restructuring expenses and costs associated with an early retirement of debt, was $2.58 per share. These results compare to reported net income of $1.77 per share and adjusted net income, excluding restructuring expenses and a non-cash expense related to waived stock compensation, of $1.91 per share for the first nine months of 2017.

Third Quarter Highlights

• Reported regional sales results⁽¹⁾: North America +12.8%, Europe/Middle East (“EME”) +14.4%, South America +2.8%, Asia/Pacific/Africa (“APA”) +5.7%

• Constant currency regional sales results⁽¹⁾⁽²⁾: North America +13.8%, EME +16.5%, South America +33.1%, APA +9.9%

• Regional operating margin performance: North America 6.0%, EME 9.3%, South America 4.5%, APA 7.9%

• Share repurchase program reduced outstanding shares by approximately 1.2 million during the first nine months of 2018

“AGCO’s solid operational performance across our regional business units and constructive market developments are driving sales and earnings growth,” stated Martin Richenhagen, AGCO’s Chairman, President and Chief Executive Officer. “We delivered sales and operating income improvement across all regions, with the strongest growth in North and South America. Price increases and focused cost control efforts helped to offset most of the trade-related material cost inflation. Equally important, we have delivered operationally while making significant progress on our long-term strategic growth drivers. Our new product launches are resonating with customers, resulting in strong demand across our targeted end-markets.”

Market Update

“Global crop production for 2018 is expected to be up modestly from healthy levels in 2017,” continued Mr. Richenhagen. “Robust harvests in North America are being offset by lower output in the European Union, Argentina and Australia due to dry conditions in those areas. However, increased grain consumption this year is expected to result in lower year-end grain inventories. Global industry sales of farm equipment in the first nine months of 2018 were mixed across AGCO’s key markets, with future demand dependent on factors such as commodity price development as well as government trade and farm support policy. North American industry retail sales increased in the first nine months of 2018 compared to the same period in 2017 as replacement demand from row crop farmers is stimulating equipment sales after years of weaker demand. Overall, we project industry retail tractor sales to increase modestly in 2018 with improved retail sales in the row crop segment and flat retail sales of small tractors compared to last year. Industry retail sales in Western Europe were up modestly in the first nine months of 2018, with improved economics for the dairy segment the primary catalyst. However, industry sales slowed in the third quarter as the impact of the hot, dry summer and the resulting weak wheat harvest negatively impacted demand. Industry sales growth in the United Kingdom, Scandinavia and Italy was partially offset by declines in Germany and France. For the full year of 2018, industry demand in Western Europe is expected to be approximately flat compared to 2017. Industry retail sales in South America decreased during the first nine months of 2018. Weak industry demand in Brazil in the first half of 2018 improved in the third quarter after more positive terms for the government financing program were announced. Industry sales declined in Argentina in response to a weak first harvest and the decline of the Peso. Industry demand in South America is expected to be relatively flat for the full year compared to 2017. Higher retail sales in Brazil are expected to be offset by lower sales in Argentina. Our long-term view remains very optimistic for demand in the agricultural equipment industry. We expect elevated grain demand driven by population growth and increased protein consumption to result in favorable income levels for farmers.”

Regional Results

North America

AGCO’s North American net sales increased 22.2% in the first nine months of 2018 compared to the same period of 2017, excluding the positive impact of currency translation. Precision Planting, which was acquired in the fourth quarter of 2017, contributed sales of approximately $97.2 million in the first nine months of 2018. Excluding the impact of acquisitions and currency translation, sales grew approximately 14.2% compared to the first nine months of 2017. The largest increases were in sprayers, high horsepower tractors and hay tools. Income from operations for the first nine months of 2018 improved approximately $42.5 million compared to the same period in 2017. The benefit of the Precision Planting acquisition and higher sales and production volumes contributed to the increase.

South America

Net sales in the South American region increased 8.6% in the first nine months of 2018 compared to the first nine months of 2017, excluding the impact of unfavorable currency translation. Sales growth in Brazil was partially offset by declines in Argentina. Income from operations increased in the third quarter, but dropped approximately $35.2 million for the first nine months of 2018 compared to the same period in 2017. The impacts of material cost inflation and costs associated with transitioning to new products with tier 3 emission technology contributed to the decrease in income from operations.

Europe/Middle East

Europe/Middle East net sales increased 15.0% in the first nine months of 2018 compared to the same period in 2017, excluding favorable currency translation impacts. Acquisitions benefited sales by approximately 3.3% during the first nine months compared to the same period last year. Sales growth was strongest in Germany, the United Kingdom and France. Income from operations improved approximately $85.4 million for the first nine months of 2018, compared to the same period in 2017, due to the benefit of higher sales and margin improvement partially offset by higher engineering costs.

Asia/Pacific/Africa

Net sales in AGCO’s Asia/Pacific/Africa region increased 7.1%, excluding the positive impact of currency translation, in the first nine months of 2018 compared to the same period in 2017. Higher sales in Australia produced most of the increase. Acquisitions benefited sales by approximately 2.5% during the first nine months of 2018 compared to the same period last year. Income from operations improved approximately $3.7 million in the first nine months of 2018, compared to the same period in 2017, due to higher sales and production levels.

Outlook

AGCO’s net sales for 2018 are expected to reach $9.3 billion, reflecting improved sales volumes, positive pricing as well as acquisition and foreign exchange impacts. Gross and operating margins are expected to improve from 2017 levels due to higher net sales as well as the benefits resulting from the Company’s cost reduction initiatives, partially offset by increased engineering expenses and higher material costs. Based on these assumptions, 2018 earnings per share are targeted at approximately $3.35 on a reported basis, or approximately $3.75 on an adjusted basis, which excludes restructuring expenses and costs associated with debt retirement.