AGCO Corporation manufactures and distributes agricultural equipment and related replacement parts worldwide. The company offers tractors, including high horsepower tractors that are used on larger farms, primarily for row crop production; utility tractors for small- and medium-sized farms, as well as for dairy, livestock, orchards, and vineyards; and compact tractors for small farms, specialty agricultural industries, landscaping, and residential uses. It also provides combines that are used in harvesting grain crops; and application equipment, including self-propelled, three- and four-wheeled vehicles and related equipment for use in the application of liquid and dry fertilizers and crop protection chemicals, as well as for after crops emerge from the ground. In addition, the company offers hay tools and forage equipment comprising round and rectangular balers, self-propelled windrowers, disc mowers, spreaders, rakes, tedders, and mower conditioners for harvesting and packaging vegetative feeds used in the beef cattle, dairy, horse, and renewable fuel industries. Further, it provides implements, including disc harrows; leveling seed beds and mixing chemicals with the soils; heavy tillage to break up soil and mix crop residue into topsoil; field cultivators, which prepare smooth seed bed and destroy weeds; drills that are used for small grain seeding; and planters and loaders. Additionally, the company offers grain storage bins and related drying and handling equipment systems, as well as swine and poultry feed storage and delivery, ventilation, and watering systems; egg production systems and broiler production equipment; and replacement parts, as well as produces diesel engines, gears, and generating sets. It markets its products under the Challenger, Fendt, GSI, Massey Ferguson, and Valtra brands through a network of independent dealers and distributors. AGCO Corporation was founded in 1990 and is headquartered in Duluth, Georgia.
Business Analysis of AGCO
The Industrial Goods & Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how AGCO compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by AGCO to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of AGCO with an interactive chart.
- Revenue Growth: AGCO reported a revenue growth of -0.8% year-on-year during 2016. Industrial Machinery Industry grew at -3.7% in the same period
- COGS share of Revenues: As a percentage of revenue, AGCO spent 79.6% of its total revenues on COGS. Industrial Machinery industry average (COGS share of revenue) in the same period was 67.3%
- R&D share of Revenues: As a percentage of revenue, AGCO spent 4.0% of its total revenues on R&D. Industrial Machinery industry average R&D spending in the same period was 1.6%
- SG&A share of Revenues: As a percentage of revenue, AGCO spent 11.7% of its total revenues on Sales, Marketing, and General Administration (SG&A). Industrial Machinery industry average SG&A spending in the same period was 20.4%
- Inventory share of Revenues: As a percentage of revenue, AGCO spent 20.4% of its total revenues on Inventories. Industrial Machinery industry average Inventory spending in the same period was 14.0%
- Accounts Payable share of Revenues: As a percentage of revenue, AGCO invested 9.8% of its total revenues on Accounts Payable (A/P) Industrial Machinery industry average Accounts Payable investment in the same period was 9.4%
- Accounts Receivable share of Revenues: As a percentage of revenue, AGCO invested 12.0% of its total revenues on Accounts Receivable (A/R). Industrial Machinery industry average Accounts Receivable investment in the same period was 16.2%
- PP&E share of Revenues: As a percentage of revenue, AGCO invested 18.4% of its total revenues on Property, Plants, and Equipments (PP&E). Industrial Machinery industry average PPE investment in the same period was 15.0%
- Intangibles share of Revenues: As a percentage of revenue, AGCO invested 26.8% of its total revenues on Intangibles. Industrial Machinery industry average Intangibles investment in the same period was 46.7%
- Net Margins: AGCO Net Margins in the year 2016 were 2.2%. Industrial Machinery industry average Net Margins in the same period were 4.7%
Sector and Industry Association of AGCO
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
AGCO is associated with Industrials Sector Group, Industrial Goods & Services Sector, and Industrial Machinery Industry.
Industrial Goods & Services sector is comprised of the following industries: Industrial Conglomerates; Industrial Machinery; Electrical Components & Equipment; Electronic Equipment & Parts; Containers & Packaging. The definitions for each of the industries is as follows:
- Industrial Conglomerates industry includes Industrial companies engaged in three or more classes of business within the Industrial industry that differ substantially from each other.
- Industrial Machinery industry includes designers, manufacturers, distributors and installers of industrial machinery and factory equipment, such as machine tools, lathes, presses and assembly line equipment. It also includes makers of pollution control equipment, castings, pressings, welded shapes, structural steelwork, compressors, pumps, bearings, elevators and escalators.
- Electrical Components & Equipment industry consists of manufacturers and distributors of electrical parts for finished products, such as printed circuit boards for radios, televisions and other consumer electronics. It also includes makers of cables, wires, ceramics, transistors, electric adapters, fuel cells and security cameras. Manufacturers of Electric motors and generators and mechanical motion control products are also part of this industry.
- Electronic Equipment & Parts industry includes companies offering Manufacturing and Design services for Engineered Components and Products used in different industries. Companies providing Laser-based manufacturing products are part of this industry.
- Containers & Packaging industry includes producers and distributors of cardboard, bags, boxes, cans, drums, bottles, jars and glass used for packaging. Specialty Packaging Products and Pressure-Sensitive Materials producers are also part of this industry.
Industry Ranking of AGCO
With $7.4 billion revenues, AGCO ranked number 4 of all the companies in the US Industrial Machinery industry. There were a total of 92 public companies in the US Industrial Machinery industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Industrial Machinery industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.