Throughout 2022, the Company experienced strong demand for its products with the Company setting records for net sales and earnings in each quarter of the year.  The Company’s record  performance was achieved despite the significant material cost increases, supply chain disruptions and skilled labor shortages that the Company experienced during the year.  Our results were also negatively impacted by currency translation as the U.S. dollar strengthened against the currencies of international countries where we operate.

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Domestic revenue decreased by $3 million (+0.1%) from the prior year to $4.5 billion due to decreased revenue in Farm & Industrial Machinery, mainly farm equipment, and Other, while revenue in Water & Environment increased.  

Overseas revenue increased by $3.6 billion (+30.3%) from the prior year to $15.5 billion because of increased revenue in both of Farm & Industrial Machinery and Water & Environment. As a result, overseas revenue accounted for 77.5% of consolidated revenue, which increased by 4.9 percentage points from the prior year. Total revenue from Kubota’s Farm Equipment & Engines segment was $13.58 billion in 2022, up 23.5% year-over-year.

North American revenue came in at $8.21 in 2022, up 34.4% from $6.11 billion in 2021. Revenue from the U.S. specifically was $7.24 billion for 2022.

Worldwide net sales and revenues increased 32 percent, to $12.652 billion, in the most recent quarter. Net sales were $11.402 billion for the quarter, compared with $8.531 billion in 2022.

“Deere’s first-quarter performance is a reflection of favorable market fundamentals and healthy demand for our equipment as well as solid execution on the part of our employees, dealers, and suppliers to get products to our customers,” said John C. May, chairman and chief executive officer. 

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This was the company’s highest annual net sales seen in the last decade and its third year of year-over-year increase. Net sales in North and South America came to €851 million ($903.9 million) for 2022 and made up 17.3% of total net sales.

“Significant growth was generated in North America through new machine sales of combine harvesters, forage harvesters and tractors,” the report said. “CLAAS was able to increase its sales in Argentina in spite of the difficult ongoing political and economic conditions,” the company added.

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In the farm segment, which includes grain, seed, and fertilizer handling equipment, aeration products, grain and fuel storage solutions, and more, sales grew 28 percent in Q4. Farm backlog is up 48 percent over the prior year.

AGI also said that drought in the Canadian Prairies led to a 27 percent reduction in backlog in the farm segment there.

The commercial segment, which includes, among other things, larger diameter grain storage bins, high-capacity grain handling equipment, seed and fertilizer storage and handling systems, sales increased 60 percent for the quarter. Backlog in commercial increased by 23 percent.

AGI made note of how supply chain challenges have affected the commercial segment.

“Many of AGI’s commercial platform contracts include provisions to pass along some or all of the key raw material cost increases,” the report said. “Open sales quotes are continuously reviewed and updated for changes in market conditions. Ongoing disruption of raw material, freight, and labor could lead to ongoing pressure on adjusted gross margin performance of the platform.”

Sales in the digital segment increased by 27 percent for the quarter.

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North American sales increased by 27 percent—a record high for the last 10 years. The company’s revenue in North America has risen every year for the past 10, it said, excluding a 5 percent decline in 2020.

The percentage of Kubota’s annual revenue coming from the North America region has also risen every year for the past 10, aside from a slight decline in 2020. In 2021, the percentage of revenue from North America reached a 10-year high of 37.3. The same market in 2020 represented 34.9 percent of Kubota’s business.

The company’s farm equipment and engines segment increased by 21 percent in 2021. The percentage of Kubota’s annual revenue coming from ag equipment and engine sales also has risen since 2012 from 61.5 a decade ago to 67.1 percent in 2021. Year-to-year comparisons in that category reveal a more up-and-down pattern.

The company forecasts a 12 percent increase in annual revenue in 2022.

In an earnings call, executive vice president Masato Yoshikawa said the company, in cooperation with dealers, plans a 6 percent increase in the price of tractors in North America and 5 percent in construction machinery.

Source: Kubota

The increases reflected sales gains in all segments, most notably agriculture, along with pricing gains.

Titan increased prices in response to rising raw material costs and other inflationary impacts in the markets, including freight, the company said.

Deere has raised equipment prices to combat rising shipping and supply chain costs, but that has not deterred demand, with the company’s North American order books full or nearly full for most of its large farm equipment in 2022, Reuters reported.

Third Bridge senior analyst Patrick Donnelly said he remained bullish on Deere’s ability to continue to roll out higher-priced precision agriculture technology in response to demand in spite of supply-related production problems.

Deere forecasts 2022 net income between $6.7 billion and $7.1 billion, up from a prior estimate of $6.5 to $7 billion.

Specifically, the company said it expects sales of large ag equipment to be up about 20 percent. In 2021, Deere said demand outpaced the industry’s ability to supply, driven by strong fundamentals, advanced fleet age and low field inventory. With all of these dynamics still present, Deere expects demand to exceed the industry’s ability to produce for a second consecutive year.

Order books for the upcoming year are mostly full, Deere said, except for a few cases where it has paused orders to reevaluate inflationary pressures later in the year.

In the small ag and turf category, Deere expects industry sales in the U.S. and Canada to remain largely flat for the year, because supply challenges continue to limit the industry’s ability to produce.

Sources: Deere, Reuters

Increased sales of high horsepower and mid-range tractors as well as precision planting products represented the largest increases. The company also saw an improvement in its income from operations resulting from higher sales and production, a richer mix of products and favorable price realization, all of which offset higher material costs.

“AGCO delivered record results in 2021 highlighted by significantly higher sales and margins compared to 2020,” said Chairman, President, and CEO Eric Hansotia. “Our performance was fueled by improved global industry demand and focused execution by the AGCO team, who exceeded sales targets despite considerable supply chain challenges.”

He continued: “Looking forward to 2022, we expect supply chain pressures to persist, presenting challenges throughout the year,” Hansotia said. “Our teams are working tirelessly with our suppliers to mitigate the impact of these issues to serve our customers as well as to deliver another strong year of performance.”

AGCO forecasts continued sales growth this year.

Source: AGCO

Domestic revenue for the Japan-based manufacturer increased by 1.3 percent, primarily because of increased sales of farm equipment. Specifically, sales in that segment increased by 6 percent.

Overseas revenue increased by 26.7 percent, again attributable to farm equipment sales, which saw a slightly higher revenue increase of 27.8 percent.

In North America, sales of tractors and construction machinery increased significantly due to strong demand along with growth in suburban development. Sales were strong in spite of supply chain disruptions, the company said.”

Source: Kubota