AGCO Citi’s 2024 Global TMT Conference Notes

Date: Sept 5, 2024

Topic: AGCO Citi’s 2024 Global TMT Conference Notes

Author: Handzalah

• Machine and tech channel and business
• Ptx includes Ptx Trimble and Precision Planting 
• Spot spraying technology
• Ptx -> main customer groups: OEMs and retrofit
• Higher yield or lower input costs
• Service parts and retrofits has steady growth
• The 3 growth levers: Ptx, Service parts, and Fendt
• Pushing ecommerce
• Farmers adds 25% incremental sales online
• Convenience increases as farmers buy online
• 80% to 120% peak and trough for the industry on average
• Increase the mid-cycle from 6% to 10% to 12% in target margins
• Committed to stay above 9% margins at trough 
• Dedicated channels for retrofit -> unique
• Revenue is a little bit over a billion today (Ptx), expects $2Bn by 2028
•  Offboard data platform -> provides farmer with usable data
• OEM is narrower field and smaller portfolio size compared to retrofit
• Reinvestment first in capital allocation
• Higher the debt repayments in capital allocation priorities
• Not focusing on share buybacks but rather special variable dividends
•  Reducing production to meet retail demand
• Room for innovation
• Claim the fastest in innovation in the industry
• Repeats the requirement to reduce inventories in NA and expect to spillover in 2025
• NA inventories to reduce from 8 month to 5 months 
• Europe much closer to targeted inventory level
• S.T. leases accelerated the downturn
• EME doing well from Fendt’s growth
• Churn from CNH business
•  Ptx EBIT margin -> high 20s