AGCO, Your Agriculture Company, a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.0 billion for the first quarter of 2018, an increase of approximately 23.3% compared to the first quarter of 2017. Reported net income was $0.30 per share for the first quarter of 2018, and adjusted net income, excluding restructuring expenses, was $0.35 per share. These results compare to a reported net loss of $0.13 per share and adjusted net loss, excluding restructuring expenses and a non-cash expense related to waived stock compensation, of $0.02 per share for the first quarter of 2017. Excluding favorable currency translation impacts of approximately 9.4%, net sales in the first quarter of 2018 increased approximately 14.0% compared to the first quarter of 2017.

First Quarter Highlights

• Reported regional sales results⁽¹⁾: North America +31.4%, Europe/Middle East (“EME”) +30.4%, South America (18.0)%, Asia/Pacific/Africa (“APA”) +21.9%

• Constant currency regional sales results⁽¹⁾⁽²⁾: North America +29.6%, EME +14.3%, South America (13.2)%, APA +12.4%

• Regional operating margin performance: North America 5.3%, EME 8.5%, South America (9.1)%, APA 2.9%

• Increased full-year outlook for net sales and net income per share

• Quarterly dividend increased 7% to $0.15, effective first quarter 2018

“AGCO capitalized on strengthening industry demand and delivered solid results in the first quarter,” stated Martin Richenhagen, Chairman, President and Chief Executive Officer. “Improved market demand in North America and healthy industry conditions in Western Europe supported sales and margin improvement in those regions resulting in better than expected sales and earnings growth for the Company. Our weak results in South America reflect the challenging industry environment and lower levels of production, as well as the transition costs associated with localizing newer product technology into our Brazilian factories. While our focus on cost management to mitigate market pressures continues, we are maintaining a strong level of investment in new products and technologies, as demonstrated by an increase in engineering expenses in 2018 over 2017, both in the first quarter, and the total planned for the full year.”

Market Update

“Farmers are facing difficult growing conditions as we start 2018,” continued Mr. Richenhagen. “A dry weather pattern across Argentina and southern Brazil has decreased 2018 crop production expectations in those regions. Cold wet weather across much of the mid-western U.S. is delaying the start of planting and has contributed to modest increases in soft commodity prices. Global farm equipment demand continues on a slow recovery path following the extended period of decline. In North America, the industry has worked through much of the excess used equipment inventory and used equipment pricing has started to improve. Row crop farmers are beginning to replace their equipment after years of weaker demand. North American industry retail sales were relatively flat in the first quarter of 2018 compared to the same period in 2017. Overall, we project industry retail tractor sales to increase modestly in 2018 with retail sales of small tractors expected to be flat compared to last year, while retail sales in the row crop segment are expected to improve. Industry retail sales in Western Europe increased in the first three months of 2018, following a year of improved profitability by the arable farming segment as well as healthy economics for dairy producers. Sales improved across the important markets of Germany, the United Kingdom and France. For the full year of 2018, industry demand in Western Europe is expected to be relatively flat compared to 2017 as the benefit of last year’s improved harvest offsets the impact of projected softening economics in the dairy and livestock sector. Industry retail sales in South America decreased during the first three months of 2018. Industry demand in Brazil softened in advance of expected positive revisions to the government financing program which starts on July 1. In addition, industry sales declined in Argentina in response to a weaker first harvest. Industry demand in South America is expected to improve in the second half of the year and 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 due to the impact of lower crop production on farm income. Longer term, we are optimistic about the fundamentals supporting commodity prices and farm income as well as healthy growth in our industry.”

Regional Results

North America

AGCO’s North American net sales increased 29.6% in the first three 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 $61.2 million in its seasonally strong first quarter. Excluding the impact of acquisitions and currency translation, sales grew approximately 11.7% compared to the first quarter of 2017. The largest increases were in mid-range and high horsepower tractors and sprayers. Income from operations for the first three months of 2018 improved approximately $23.8 million compared to the same period in 2017. The benefit of the Precision Planting acquisition and higher sales and production volumes produced most of the increase.

South America

Net sales in the South America region decreased 13.2% in the first three months of 2018 compared to the first three months of 2017, excluding the impact of unfavorable currency translation. Significant sales decreases in Argentina and Brazil produced most of the decline. Income from operations dropped approximately $19.0 million for the first three months of 2018 compared to the same period in 2017. Lower sales and production volumes, the impact of material cost inflation and the costs associated with transitioning to the new products with tier 3 emission technology all contributed to the decrease in income from operations.

Europe/Middle East

AGCO’s EME net sales increased 14.3% in the first three months of 2018 compared to the same period in 2017, excluding favorable currency translation impacts. Acquisitions benefited sales by approximately 3.8% during the first three months compared to the same period last year. Higher sales in Germany, the United Kingdom and France produced most of the increase. Income from operations improved approximately $35.4 million for the first three 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

Asia/Pacific/Africa net sales increased 12.4%, excluding the positive impact of currency translation, in the first three months of 2018 compared to the same period in 2017. Higher sales in Australia and China produced most of the increase. Acquisitions benefited sales by approximately 3.4% during the first three months of 2018 compared to the same period last year. Income from operations improved approximately $2.6 million in the first three 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 sales as well as the benefits resulting from the Company’s cost reduction initiatives, partially offset by increased engineering expenses. Based on these assumptions, 2018 earnings per share are targeted at approximately $3.65 on a reported basis, or approximately $3.70 on an adjusted basis, which excludes restructuring expenses.