What Management Said
Read the full Q4 2025 transcript ↗Welcome to those of you joining us for AGCO's fourth quarter 2025 earnings call. We'll also cover future revenue, crop production, farm income, production levels, price levels, margins, earnings, operating income, cash flow, engineering expense, tax rates, and other financial metrics. EAM continued to be a powerful driver, delivering 8% growth and extending its multi-quarter record of strong performance. On a full year basis, we delivered a 7.7% adjusted operating margin.
Adjusted earnings per share were $5.28 on sales of $10.1 billion, reflecting a 13.5% decrease versus 2024, or just 7%, excluding the divested Grain and Protein business. These results highlight the disciplined execution of our global teams, driven by our three high-margin growth levers, sustained cost discipline, and the positive impact of our multiyear structural transformation. Our redefined portfolio and focus are where AGCO wants to be, poised to continue serving farmers and investors better than anyone else when demand strengthens. The FarmerCore model, combined with digital engagement, 24/7 online parts access, machine configuration tools, servicing capabilities, and industry-leading parts fill rates, continue to support this high-margin growth lever and drive meaningful progress.
Our overall confidence in the business is reflected in $250 million of share repurchases in the fourth quarter, part of our $1 billion capital return program announced last year. Trade patterns and record global crop production continue to compress farm margins, with corn, soybean, and wheat prices near breakeven levels. Over time, we continue to expect increased adoption of precision ag technologies as farmers constantly look for ways to profitably increase yields. Entering 2026, current market conditions continue to moderate demand across most equipment categories, yet we remain able to advance our technology strategy and expect long-term positive industry progress.
- Q4 adjusted operating margin of 10.1% (up 20 bps YoY) on net sales of $2.9B; full-year 7.7% adjusted operating margin, best-ever at this point in the cycle
- Record free cash flow of $740M in 2025, up more than $440M versus 2024
- Europe/Middle East operating margins approaching 17% in Q4 on effective pricing and favorable mix; income up $57M YoY
- Highest global market share in AGCO history and largest one-year North America large-ag share gain, plus record Net Promoter Score and record patent filings
- Reduced North America dealer inventory units by over 9% in the quarter and more than 30% for the full year; ended Europe at ~4 months of supply (on target)
- $65M of cost savings delivered in 2025; ~$190M run-rate achieved; $250M accelerated share repurchase executed in Q4 under $1B authorization
- Full-year adjusted EPS of $5.28, down 13.5% YoY (down 7% excluding divested Grain & Protein)
- North America operating margins below breakeven in Q4; income down $33M YoY on 50%+ production cuts and factory under-absorption
- North America industry retail tractor sales down 10% and combine sales down 27% in 2025
- South America net sales down 9% (ex-FX) with competitive discounting pressure; dealer inventories rose to ~5 months vs 3-month target; segment income down $21M YoY
- Full-year production hours down 12% YoY driven by North America; commodity prices (corn, soybean, wheat) near breakeven compressing farm margins
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Net sales | FY2026 | $10.4B-$10.7B |
| Adjusted EPS | FY2026 | $5.50-$6.00 |
| Adjusted operating margin | FY2026 | 7.5%-8.0% |
| Adjusted EPS | Q1 2026 | $0.40-$0.45 |
| Net sales | Q1 2026 | Modestly up YoY |
| Pricing | FY2026 | 2%-3% (plus 2% FX benefit) |
| Cost savings (incremental) | FY2026 | $40M-$60M |
| Engineering expense | FY2026 | Up ~$50M YoY (~5% of sales) |
| Effective tax rate | FY2026 | 32%-34% |
| Capital expenditures | FY2026 | ~$350M |
| Free cash flow conversion | FY2026 | 75%-100% of adjusted net income |
| North America large-ag industry sales | FY2026 | Down ~15% |
| PTx revenue | FY2026 | Flat to modestly up |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Q4 net sales | +1% reported (up ~4% ex-Grain & Protein; -3% ex-currency) | Grain & Protein divestiture and moderated industry demand, offset by Europe strength |
| Q4 adjusted operating margin | +20 bps to 10.1% | Resilient Europe/Middle East performance and continued cost discipline despite under-absorption and discounting |
| Full-year adjusted EPS | -13.5% to $5.28 | Grain & Protein divestiture plus soft market and low production levels |
| Europe/Middle East Q4 net sales | -1% (ex-currency) | Lower Western European tractor sales offset by growth in Germany, UK and hay tools |
| South America Q4 net sales | -9% (ex-currency) | Moderate demand; lower tractors and implements offset partly by combine growth |
| North America Q4 net sales | -9% (ex-currency) | Moderated demand and deliberate production discipline; lower sprayers and mid-range tractors |
| Asia Pacific Africa Q4 net sales | +3% (ex-currency) | Higher Australia sales partly offset by lower sales across several Asian markets |
| Q4 replacement parts sales | +5% reported (-1% ex-currency), $440M | Aftermarket growth lever; full-year parts $1.9B |
| Full-year free cash flow | +$440M to $740M (record) | Better working capital, higher Q4 sales, lower capex |
| Full-year production hours | -12% | North America production cuts to normalize dealer inventory |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Structural transformation to higher-margin business | Nearly doubled margins from prior troughs | Confident in 14%-15% mid-cycle adjusted operating margins; best-ever trough performance | — |
| Dealer inventory normalization | NA at 8 months end of Q3 | NA down to 7 months (target 6); Europe ~4 months on target; South America ~5 months vs 3 target | — |
| PTx / Precision Ag | ~40 elite dealers start of year, $860M-ish base | 70+ PTx elite dealers, 14 new products in 2025, PTx revenue $860M; retrofit outperforming equipment market | — |
| Fendt momentum | — | Standout year, NA large-ag share gains, IDEAL combine wins, Fendt 800 launch expected to be highly successful | — |
| Cost discipline (Project Reimagine) | $65M savings 2025, ~$190M run-rate | 700 projects; ~160 agentic AI projects, 50 done; shift to low-cost sourcing in 2026-2027; targeting north of $200M run-rate | — |
| Capital returns | Special variable dividend program | Shifted to share repurchases; $250M Q4 ASR under $1B authorization; $0.29 quarterly dividend (~$87M FY) | — |
| Tariff and price-cost headwind | ~$40M tariff cost in 2025 P&L | ~$105-$110M total 2026 (~$65M incremental, ~1% of sales); pricing only covers cost on dollar basis, margin dilutive | — |
| Farm economics / end-market demand | — | Record global crop production and near-breakeven grain prices compressing farm margins; aging fleet building pent-up demand | — |
Q&A Summary
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