Fendt broke records for corporate sales figures in 2008. Sales revenues for the AGCO GmbH increased by 25 percent to 1.33 billion euros. Due to the very positive investment climate, 15,428 Fendt tractors were sold, 2,115 more than in the previous year. “Looking back, the business year 2008 was an absolutely exceptional year. Due to the current extreme price pressure, though, European farmers are investing considerably less,” said Peter-Josef Paffen, Spokesman of the Management Board at the annual press conference in Marktoberdorf on 6 October.

Agriculture and Outlook

“After a longer period of growth and an exceptional year in 2008, the agricul-tural commodities markets have sobered up faster than expected. The ex-tremely low producer prices have had a negative impact on the general mood of farmers in Germany, Europe and around the world. The hope that the prices would to some extent reach a reasonable level in late summer was never fulfilled. On the contrary: the extreme price pressure continues to hold on. As a result, the agricultural equipment markets have been declining even faster since mid-year and parts have actually collapsed,” said Paffen regarding the current situation.

For the Fendt brand, the first half of 2009 was the best half year in the history of the company. “We saw gains in the key figures for revenues, sales and market share. In the second half of the year, we were not able to escape the general downward trend on the markets. Despite this trend reversal, the year 2009 will be a good business year for Fendt. The important thing to remember is that we continue to forecast an excellent outlook for agriculture and the agricultural equipment industry worldwide for the medium and long term. The current development, though, has shown us that we must be prepared for stronger short-term market fluctuations,” said Paffen.

Tractor sales - 2008 an exceptional year

Driven by an exceptionally good investment climate in agriculture, Fendt sold a total of 15,428 tractors on the market, which amounts to an increase of 16 percent, or 2,166 units, compared with the previous year. Fendt hit the upper capacity limit at the production locations in Marktoberdorf and Asbach-Bäumenheim. Since the number of incoming orders for the full year 2008 clearly exceeded the maximum production and sales figures, the order back-log at the end of the year was very well cushioned. Production therefore started at full power in 2009. Then due to a decreasing number of incoming orders, Fendt decided to adjust the production target figure for 2009 down-wards to 14,000 units at the beginning of September. That would make 2009 the second highest production figure in 20 years – despite the very difficult business environment. Depending on the market and order situation, the pro-duction volume can be increased immediately.

Fendt harvesting

“We are succeeding in taking giant steps forward in the harvesting division. The line of combines and balers is now almost complete, and the development of the new forage harvester is progressing swiftly. That means that we are well on our way in implementing the AGCO strategy to achieve a proper position in the harvesting equipment sector in the future,” explained Paffen.   

Positive investment climate in 2008

In 2008, Fendt increased sales revenues by 25 percent to 1.330 billion euros (2007: 1.065 euros). The increase is due to the very positive investment cli-mate on the one hand, and on the other, because of the increase in the share of high-horsepower tractors. Included are sales revenues from Fendt tractors, Fendt harvesting machines, Challenger Germany and some 3,000 transmission units for sister brands and Fendt Materials Handling. According to new projections, the key figures for 2009 will lie between the results of the peak year 2009 and the excellent year 2007.

Fendt – the premium brand in the AGCO Corporation

As the premium brand in the AGCO Corporation, Fendt has the strategic task, and the claim, to offer the best and most efficient technology for modern farming in the world. For this reason, AGCO invested some 36 million euros in Fendt research in 2008. For the current year, 44 million euros have been planned for research and development. In addition to the comprehensive expenditures for development, AGCO invests over 30 million euros in all other corporate areas each year to secure the future of the com-pany.

Project for expanding capacity     
      
The starting point for the large Fendt Ahead2 project for expanding produc-tion capacity to 20,000 units at the Fendt locations in Marktoberdorf and As-bach-Bäumenheim, with an investment volume of 172 million euros, was to provide a realistic opportunity for Fendt's continued sustainable growth in the coming years. After approval from the AGCO Corporation and the signing of a supplementary wage agreement at the end of last year, the construction of the new F2 assembly hall in Marktoberdorf was started. Some of the machine tools and logistics systems are already in operation in the 1.5 hectare hall.

“After evaluating the situation at the beginning of September, we in the man-agement, in close consultation with the AGCO Corporation and the works council, decided to halt the expansion of capacity for six months. The reason for this is the tough market trend on many markets. The project can be re-activated at any time,” explained Paffen.

Fendt workforce grows to almost 3,400 employees     
      
At the end of December 2008, 3,321 permanent employees worked for Fendt. That was 241 more than in the prior year and over 531 more than two years ago. At the end of July 2009, a total of 3,397 workers were employed.

Overall evaluation 2008

“In the overall evaluation for the full year 2008, we are happy to record that it was an absolutely exceptional year. High producer prices and farming income in the years 2007/2008 have spurred on the agricultural equipment market. We profited from this situation and have broken records for our corporate sales figures,” explained Paffen.

Germany - market share expanded

The year 2008 was an exceptional year, which is evident in the development of the number of registrations in Germany. In a dynamic final spurt, the regis-tration numbers in Germany climbed by 10 percent to 31,500 units. The mar-ket therefore performed much better than expected. “The battle for market share and unit sales was, as always, hard and tough.  We were able to increase our sales figures in Germany by more than ten percent and expand our market share slightly to 17.2 percent. Once again it was very exciting to see who would be ahead in the over 51-hp tractor segment. In 2008, with a market share of nearly 20 percent, we came in second place. In the growing high-horsepower tractor segment over 200 hp, we came in first place with a large margin with a market share of some 38 percent. And additional positive news was that the most sold tractor in Germany in 2008, the 205 hp 820 Vario, comes from our company,” said Paffen.

In the course of 2009, the tractor market in Germany cooled off noticeably. From January to August, a total of 21,546 new tractors were registered, which is about four percent less than in the prior year. For the full year 2009, the industry is expecting a market decline of some ten percent.

“However, Fendt continues to drive against the trend. We were able to expand our unit sales and market share during the declining market. From January to August 2009 the German Motor Vehicles Division registered 4,384 Fendt tractors, 129 more than in the previous year. That corresponds to a market share of 23 percent and first place with a clear lead in the registration statistics for tractors over 51 hp,” explained Paffen.    

Fendt on export markets

Almost two thirds, or 64 percent, of Fendt products are exported. The region Western and Central Europe is the most important sales region for Fendt by a large margin. Some 95 percent or 14,700 Fendt tractors (including Germany) were delivered to customers through importers and Fendt dealers in this re-gion. The remaining five percent are spread out over North America, Austra-lia, Asia and Eastern Europe.

The development of the tractor market in Europe has shown an almost con-tinuous rise to 207,000 units up to 2008. In the current year, though, a clear decline of some 15 percent to about 175,000 units is expected, which would be about the level of five years ago.

“The important thing here is that the Fendt market share has improved step by step. In 2008 we achieved an increase of 6.8 percent. In the short and medium term, we see realistic opportunities to increase the Fendt market share by at least ten percent. This year we could reach the eight percent mark. Capturing market share is very important, especially in times of declining markets. We have succeeded in doing this on many markets in the first half of 2009,” ex-plained Paffen.

In France – the largest tractor market in Europe for years and the largest ex-port market for Fendt – Fendt attained a market share of over eight percent for the first time, with a continued upward trend.

Things are also moving ahead on the very nationally-oriented market in Italy. The market shares are increasing and the new narrow track tractor has created an additional upswing there.

The situation in Spain is very similar, with an increase in market share to 4.5 percent.

Fendt's most important Western European import markets, Austria, Switzer-land, Belgium, Holland and Luxembourg, recorded market shares around 10 percent, even 15 percent in Holland.

The market in Great Britain is developing well. Fendt unit sales and market share approached 4 percent there.

Fendt also strengthened market share in Scandinavia, despite the fact that parts of the market were susceptible to a general downward trend.

“In many countries in Central Europe, the agricultural equipment markets have fallen quite sharply. These markets are particularly dependent on low-cost government and European credit programmes, which have not yet found their way into circulation as expected. The need for modern agricultural equipment continues to be very high and we expect a return to normality in the near future,” said Paffen regarding the current situation. “In the CIS countries, the market collapsed completely after the global financial crises. Even larger businesses apparently do not receive financing for the required investments. That will and cannot remain that way. But nobody knows when things will return to normal.” 

In the sales region Asia, Australia and North America, Fendt delivered around 600 Fendt tractors in all power classes. Fendt sees potential on these markets for the future.

“In summary, I have found that the agricultural equipment markets in Europe have undergone a delayed impact from the effects of the financial and eco-nomic crises, which are stronger than first expected. The reason is the extreme drop in prices and income experienced by our customers, the farmers.
We assume that the Fendt brand will come out of the low much stronger, since we offer our customers a highly attractive line of tractors and harvesting machines, today as well as in the future. Furthermore, we see there is still a considerable potential to increase unit sales and market shares in many coun-tries in Western and Central Europe. Our objective is to expand the Fendt market share to over ten percent in the medium term. If we add the expected sales in Eastern Europe, Asia, Australia and North America, that yields a real-istic picture of 20,000 Fendt tractors in the medium term,” said Paffen in con-clusion.

About Fendt

Fendt is the leading high-tech brand within the AGCO Corporation and is geared towards customers with the highest demands. Tractors and harvesting machines from Fendt are at work in enterprise-oriented farms and other inter-esting areas of application on fields around the world. Fendt is considered to be the global innovation leader for agricultural machines in many different areas. Therefore Fendt customers profit faster than others from the newest technology for boosting performance, efficiency and profitability of their farming businesses. AGCO Fendt employs a workforce of 3,300 in the areas of research and development, sales and marketing as well as production, ser-vice and administration at the locations in Marktoberdorf and Asbach-Bäumenheim in Bavaria and, since mid-2009, also in Hohenmölsen in Saxony-Anhalt.

Contact: Fendt-Pressestelle / PR
  
Sepp Nuscheler
Tel.:   +49 (0) 8342 / 77 - 343
Fax:    +49 (0) 8342 / 77 - 684
Mobile:   +49 / 171 / 4135581
E-mail:  pressestelle@xfendt.de

Ursula Fuchs
Tel.:   +49 (0) 8342 / 77 - 271
E-mail:  ursula.fuchs@xfendt.de

About AGCO

AGCO, Your Agriculture Company, (NYSE: AGCO) (www.agcocorp.com) was founded in 1990 and offers a full product line of tractors, combines, hay tools, sprayers, forage, tillage equipment, implements, and related replacement parts. AGCO agricultural products are sold under the core brands of Challenger®, Fendt®, Massey Ferguson® and Valtra®, and are distributed globally through more than 2,800 independent dealers and distributors, in more than 140 countries worldwide. AGCO provides retail financing through AGCO Finance. AGCO is headquartered in Duluth, Georgia, USA. In 2008, AGCO had net sales of $8.4 billion.