We stand shoulder-to-shoulder with farmers with differentiated machinery and innovative technology, while providing exceptional value as we structurally change to become a higher-performing company.”
— Eric P. Hansotia, Chairman, President & Chief Executive Officer
Chairman’s Message
Dear fellow shareholders, employees, customers and dealers:
It was another transformational year for AGCO in 2024 — our most significant yet as we structurally changed the business to build the foundation for a more resilient, sustainable and profitable company. The headline event was closing the largest ag technology deal in history to create the PTx Trimble joint venture, which was quickly merged with our Precision Planting business to form PTx — now an industry’s leading portfolio of mixed fleet, precision ag technologies and solutions.
We also completed the divesture of a majority of our Grain & Protein business, better positioning us to focus solely on agricultural equipment and precision ag technology products in support of long-term, high-growth, high-margin opportunities. While undertaking these actions to drive future growth and profitability, the industry downturn also prompted us to adapt with a new mindset around operational efficiency, just as our farmers must do in a down market. We made big strides to take cost out of the organization in the near term while also launching a longer-term comprehensive rewiring of the company, structurally changing our baseline and how we work to create a more agile and resilient enterprise.
In recent years, AGCO’s Farmer-First focus has fueled significant improvements in adjusted operating margins. That progress has lifted us from a company that in the past ranged from around 4% adjusted operating margins at trough, to around 8% at the top of the cycle. Despite an industrywide correction in 2024, restructuring the portfolio and driving operational efficiency enabled us to deliver an adjusted operating margin of 8.9%, well above previous downturns. In fact, it was the fourth-best adjusted operating margin in AGCO's history. That performance confirms our confidence that our work to structurally transform the company is gaining momentum. We are delivering on our commitment to relentlessly create value for both farmers and shareholders alike.
Precision technology to solve ag challenges
Standing shoulder-to-shoulder with the farmers we serve, AGCO is a leader in offering precision technology to solve the toughest problems in agriculture. PTx is the next chapter of that story and represents a massive leap forward to position us as the leader in precision ag technologies and solutions for mixed fleets.
Innovation is at the heart of everything we do; since 2019, our new patent applications have grown nearly 60%, with a record number of filings across the company in 2024. The case for these innovative solutions has never been clearer: Globally, the farmer is facing increasing challenges. Population growth is matched by an increasing demand for more meat in the diet as economies mature. Meanwhile, the demand for ethanol and other biofuels continues to grow. These trends mean farmers must create more grain, even as they are pressured to do so with fewer inputs. Precision technology is the most effective option to bridge the gap.
This challenge cannot be addressed by offering precision solutions solely on new equipment. That is why AGCO, uniquely, has a retrofit-first mindset aligned with the needs of all farmers — no matter the vintage or brand of their equipment.
This includes exciting solutions like PTx Trimble OutRun™, a fully autonomous retrofit kit that allows tractors, including older models, to pull grain carts without drivers during harvest, and Precision Planting’s SymphonyVision targeted spraying system, which employs cameras to intelligently adjust the application of herbicide to target only weeds and not crops. We also see a compelling need to provide a single data platform for farmers to manage all field work across their mixed fleets and plan to bring our complete offering to market in 2027. Backed by accelerating innovation, global expansion and continued development of our channel, we expect to grow our precision ag sales to $2 billion by 2029.
Fendt: Continuing the transformation into a full-line, global brand
Another growth pillar of our Farmer-First strategy is the globalization and full-line product rollout of our Fendt premium brand. Fendt is designed to meet the needs of the most demanding farmers in the marketplace. We are well on our way toward unlocking Fendt’s full potential — having grown sales in North and South America from $300 million in 2020 to $1 billion plus in 2024. What began as a European tractor business is now a global, full product line offering including planters, sprayers, combines and hay equipment — along with technology solutions. Fendt has introduced some of the most innovative equipment in the industry, including the award-winning Fendt® 600 Vario® Series tractor in North America, and the Fendt Momentum® 30-Foot Planter, which brings advanced planting benefits to smaller farms.
Fendt’s reach into new global markets has expanded rapidly. In just four years we have increased dealer coverage in South America from zero to around 80%, and in North America from 40% to 80%. Today we are focused on strengthening awareness of the Fendt brand to penetrate more deeply in areas where we already have coverage. These initiatives, coupled with a robust pipeline of products under development, position us to achieve our goal of $1.7 billion in Fendt sales by 2029.
Global parts: Resilient, profitable and growing
The third growth pillar of the AGCO Farmer-First strategy is maximizing opportunities in global parts. AGCO’s approach is straightforward: offer the right parts in the right place with fill rates that consistently lead the industry. In 2024, we increased the percentage of orders fulfilled from available inventory across all four regions. E-commerce is playing an increasing role and offers a host of benefits. Farmers enjoy placing orders on their terms and on their schedule. This also leads to larger orders — about 25% larger on average. Notably, parts remains the highest-margin part of our business, and it continues to grow throughout all market conditions. We are on track to increase e-commerce to 25% of parts sales and to grow the parts business from $1.8 billion in 2024 to approximately $2.3 billion in net sales by 2029.
FarmerCore: To get even closer to farmers
Another important milestone in our transformational journey was the 2024 launch of FarmerCore, an entirely new approach to distribution focused on uptime. Initially launched in North and South American markets, FarmerCore is all about bringing the business to the farmer instead of requiring them to come to us. That means allowing farmers to research, buy and finance their machines, order parts and get equipment serviced at their location versus a dealer location. It emphasizes mobile, on-farm solutions, utilizing high-capability service trucks that can perform the same services as a traditional brick-and-mortar facility. And it is all enabled through a full suite of digital solutions. Farmers tell us they love the flexibility and convenience of this new approach — one that is unique in our industry.
Leveraging innovation to drive operational efficiency
In 2024, faced with a weaker demand environment, we took decisive actions to address expenses, including reducing production hours by 28%. At the same time, we began structurally changing AGCO's operations to a higher-performing company, regardless of cycles. One way we will achieve this better, simpler and faster way of working is through technology with tools like artificial intelligence and automation to simplify and standardize our work. Through all these actions, we made the difficult decision to downsize our global salaried workforce by approximately 6%.
An efficient organization also is one that operates sustainably and responsibly to create long-term value. We are especially proud of our progress in improving safety — driving down our total case incident rate by more than 50% from 2023 to 0.89 in 2024 — a world-class performance and the best in our company’s history. Additionally, 71% of locations reported zero recordable injuries, which is truly outstanding. We like to say AGCO is where extraordinary grows, and the hard work, dedication and commitment to excellence of one global AGCO team allows us to deliver even more value to farmers.
Looking forward: A more resilient AGCO built to prosper in every environment
That value for farmers is never more critical than during downturns. Market corrections are normal, even inevitable, in our industry, and we expect weaker demand will likely persist in 2025 before the cycle turns. The transformative measures we undertook across the business in 2024 created a more resilient AGCO — both for the coming year and through the full market cycle. Our confidence in this approach has led us to raise our 2029 target adjusted operating margin to a 14%-15% range at mid-cycle. We remain deeply committed to ongoing value creation and to returning value to shareholders, with approximately $1.8 billion returned over the last five years.
AGCO is at the forefront of the technology-driven revolution that is rapidly transforming the agriculture industry — enabling farmers to be more productive than ever in history. We stand shoulder-to-shoulder with farmers with differentiated machinery and innovative technology, while providing exceptional value as we structurally change to become a higher-performing company. We are excited to continue — and accelerate — that transformation, working relentlessly to grow value for farmers and all our stakeholders.
Sincerely,
