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Non-Tech : Heavy Machinery. CAT DE CSE DDC CUM -- Ignore unavailable to you. Want to Upgrade?

To: Wade who wrote (72)	4/29/1999 1:15:00 PM
From: Paul Berliner	Read Replies (1) \| Respond to of 190

What a very interesting earnings release from AG. Here is some text from it that is invaluable to forming an opinion on the segment as a whole, plus some it contains some news about Latin America that I didn't see in the DE, CSE or CAT releases (regarding Argentina). Regional Results and Outlook North America -- Continuing the trend established in the second half of 1998, industry retail unit sales of tractors and combines declined for the first quarter of 1999 when compared to the prior year period. Overall, industry retail unit sales of tractors decreased 2% with larger declines experienced in the high horsepower segments. Industry retail unit sales of combines decreased 42% from the first quarter of 1998. "Declines were significant for high horsepower tractors and combines, which are the segments most severely affected by the current low commodity prices," stated Mr. Shumejda. As expected, AGCO's retail sales declined in most equipment segments in North America from their strong first quarter 1998 levels. Western Europe -- Industry retail unit sales of tractors in Western Europe for the quarter declined 3% when compared to the first quarter of 1998. While weakness continued in the UK and Scandinavian markets, these declines were offset to some extent by strength in the larger markets of France and Germany, where the Company maintains a large market position, as well as Italy. AGCO's retail unit sales results were mixed depending on the market but in most instances were below prior period levels. "Our new Massey Ferguson 6200 and 8200 series models, with new features and higher horsepower segments, were well received during their first quarter European introduction. While availability of this product was limited during the quarter, customer demand has been strong, even with the recent market decline, and our production forecasts have been increased to meet this heightened demand," stated Mr. Shumejda. South America -- South American industry retail unit sales of tractors during the first quarter decreased 8% when compared with the prior year period. Continued strength in the Brazilian market has been offset by significant decreases in the other South American markets. AGCO's first quarter 1999 retail sales were higher than the prior year in Brazil and were lower in the rest of South America. "The Argentine market, which continues to suffer due to the region's economic uncertainty, low commodity prices and tightening credit, experienced the worst quarter for industry sales in a decade," stated Mr. Shumejda. "The strength in the Brazilian market is being fueled by a combination of higher income to the country's farmers due to the Brazilian currency devaluation as well as advance purchasing of equipment due to inflationary fears." Rest of the World Markets -- Outside of North America, Western Europe and South America, AGCO's net sales for the first quarter of 1999 decreased in all regions with the exception of the Asia / Pacific region. While sales to the Asia / Pacific markets continue to be depressed due to that region's economic crisis, AGCO's sales level has stabilized and is essentially equal to the first quarter of 1998. Outlook -- Given the continued forecasts for strong harvests and reduced export demand of agricultural commodities, AGCO's full year 1999 outlook for agricultural equipment sales in the major regions of the world remains unchanged from previous forecasts. In North America, the Company expects an overall decline of 15-20% in industry demand with the high horsepower tractor and combine segments declining most significantly. In Western Europe, the Company continues to expect industry levels to be 5-10% below 1998 levels. The Company expects the overall South American market to be 10-15% below 1998 levels with continued strength in the Brazilian market partially offsetting meaningful declines in the remaining markets of the region. The Company expects no improvement in the Rest of the World markets with sales forecasted to be flat to 5% below the prior year. "Even though the industry outlook is forecasted to decline in most major markets, AGCO expects to be profitable in 1999 with a continued focus on generating strong cash flow," stated Mr. Shumejda.