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DULUTH, Ga. (AP) — Farm equipment maker Agco Corp. said Thursday that its net income rose 53 percent in the second quarter on stronger sales of its tractors, combines and other machinery.
The Duluth, Ga.-based company raised its forecast for the year, sending shares up 6 percent. But the company also warned that demand in the U.S. could be hurt by the severe drought conditions across the country.
For the three months ended June 30, the company said it earned $204.9 million, or $2.08 per share. That's compared with $133.7 million, or $1.36 per share, in the year-ago quarter.
Analysts on average expected a profit of $1.77 per share, according to FactSet.
Revenue rose 14 percent to $2.7 billion in the quarter, which fell short of the $2.8 billion analysts were expecting. The company noted that its revenue grew 25 percent when stripping out the impact of foreign currency exchange rates.
Like other U.S. companies, Agco is taking a hit as the dollar strengthens amid global economic fears. Companies that do business overseas are hurt when that happens because international sales translate into fewer dollars back home.
For the quarter, Agco said sales in North America rose 36 percent, excluding the impact of acquisitions and other items. In Europe, the company said demand is at normal levels in key Western European markets but has weakened in Southern Europe, where countries including Greece, Spain and Italy face debt crises and budget cuts. Demand in South America remains steady as a result of government financing programs, solid crop prices and improved weather, the company said.
Over the long-term, Agco noted that growing populations and a shift toward meat-based diets are driving food consumption and demand for grain. That in turn boosts the agriculture equipment business, it said.
Agco now expects an adjusted profit of $5.50 to $5.75 per share for the year, which is more optimistic than the $5.50 per share it previously forecast. The company also said its board approved a $50 million stock repurchase program.
Shares rose $2.47 to close at $43.45.