Farm sales

Ag Growth International Reports Agriculture Sales Up 9% in 2020 in North America

Resilient fourth quarter results close a year marked by many challenges but
substantial strategic progress. The company’s investments in building its 5-6-7 diversification strategy contributed to a relatively strong performance given the challenges throughout the year created by the COVID-19 pandemic.

“We are pleased with the relatively strong performance of AGI in the fourth quarter and into 2020 given the challenging environment and the impact on our markets of COVID-19,” said Tim Close, President and CEO from AGI. “The momentum was solid in AGI as we approach 2021 and has accelerated since the start of the year with, as of today, consolidated order books up by around 40% compared to at the same time last year. Various factors are contributing to this growth, with most of the momentum coming from market share growth and strong performance in several of our key regions, including Brazil, India, EMEA, the United States and our agricultural segment in North America. A rebound in business activity, high planting expectations globally, high crop prices and steel dynamics are also contributing to the strong environment. “

In North America, AGI’s agricultural segment commercial sales increased 9% year-over-year, with particularly strong demand for portable agricultural equipment. North American commercial markets have been hit the hardest by COVID-19, as large investment projects have experienced routine delays due to planning issues, general market uncertainty and a customer trend to focus on standstill operations. Together, these factors resulted in an overall sales decline in the North American commercial segment of 27% compared to 2019.

International regions were strong despite challenges from COVID-19. Manufacturing plants in EMEA and South America continue to show improvements in operational performance, resulting in improved margins despite COVID-19 production disruptions. South America continues to show substantial sales growth of 18% compared to 2019 thanks to growing market share. Asia-Pacific recorded strong sales, growing 36% from 2019, or 6% increase excluding the acquisition of Milltec in March 2019. EMEA commercial markets have also been affected due to COVID-19 and project delays resulted in an overall decrease of 10%.

Farm segment

Farm-gate sales activity and backlog increased significantly from the levels of the previous year as AGI dealers set to replenish their inventories and stay ahead of steel price increases in the future. forecast of a busy year linked to high planting intentions. All of these factors resulted in an increase in farm arrears of 56% in Canada and 26% in the United States compared to December 31, 2019.

International Farm’s order books are also strong with a substantial increase in Brazil and increased by increases in Australia and in the EMEA region bringing these order books up by 109% compared to December 31, 2019. Volumes in Brazil continue to grow as the AGI brand is established in both the robust domestic market as well as export markets which are propelled by increasing crop size, increasing global demand and supported by prices high harvests and a favorable exchange rate.

The Australian market is expected to post the second largest harvest on record and in the EMEA region AGI continues to work with existing and new dealers / distributors to increase inventory in key locations to facilitate in-season sales.

Commercial sector

Management expects increased planting intentions in North America combined with a post COVID-19 rebound in project activity will drive demand for grain and fertilizer systems. While COVID-19 has had a substantial impact on project activity, quotes, project development and progress in North America, the impact on projects in Western Canada has been more severe than in the United States, as growth plans were put on hold in favor of essential maintenance.

The Canadian commercial backlog has fallen by 55%; however, management believes that the impact of COVID-19 on Canadian business plans is temporary and that investment in business infrastructure in Canada will begin to increase in the second half of 2021. Eastern Canada is already experiencing a boom. increase in project activity, which leads us to expect a rebound relative to Western Canada. Overall, listing activity saw an increase in activity month over month, indicating a positive trend in this affected region.

Business trends are also positive in the United States and management expects sales to continue to improve with a constant stream of maintenance and small, near-term investment projects. Trade tensions that have contributed to delays in capital investment in the US trading space over the past two years appear to be improving as crop export volumes normalize. Commercial order books in the United States increased 30% from the previous year, raising further expectations for investment in US grain infrastructure.

International commercial sales continue to demonstrate strength and listing activity in all regions has essentially rebounded to pre-COVID-19 levels, leading to a 13% increase in order books compared to December 31, 2019.