Martin Richenhagen, AGCO chairman and chief executive, was at the launch of the new Valtra tractors in France last week where he gave his usual forthright presentation about the state of the farm machinery market, and the competition across the world. AGCO owns the Massey Ferguson, Fendt, Valtra and Challenger brands.
Mr. Richenhagen said that AGCO would achieve sales of $10 billion in 2012, up from $8 billion in 2011. "We think that even with drought in America and some finance problems all over Europe will have another record year," he added.
Giving a strong hint at his continuing interest in buying Claas, he added wryly, "I'm always looking over there; imagine how nice a Claas combine would look in Fendt colours. I met with Kartina Claas and she likes it so much I think she will keep it, at least until Helmut is still around."
On the issue of further AGCO acquisitions he said, "The GSI was a very good acquisition. In many parts of the world up to 50% of harvest is lost after harvest. Grain storage and handling after the harvest is a big problem in Russia, Brazil, China and Africa, so that is why the GSI acquisition is a good acquisition for AGCO."
Looking towards other acquisitions, Mr. Richenhagen said that AGCO is planning on organic growth. "We are in all major markets, we have all of the products that we need and we believe that we can close the product gaps without an acquisition. That does not mean that we don't carefully check those acquisitions where we can get to market quicker." Last year AGCO bought a combine business in China with an output of 8,000 units. The combines will be branded Massey Ferguson in China.
AGCO also bought a sugar cane harvester company in South America. The sugar cane machines will soon be branded Valtra, as Valtra has a strong market share in South America.
He added, "We look into opportunities where we either can go to emerging or new markets faster or where we can close a gap that we might have. If tomorrow Fella might want to have a loader wagon and if something was to come available there, we could say yes," added Martin Richenhagen. These would be smaller acquisitions, and he added that AGCO was financially very strong and could do deals for $2 billion, "but nothing is available unfortunately, we have to be patient."
On the issue of the development of the AGCO Power engines, formerly Sisu, Richenhagen said that in the long term Fendt will use AGCO Power engines. "It has already started with Fendt 400 series. We need to do some development work so as not to change the compact design and look of Fendt tractor. The AGCO Power engine for six cylinder tractor is 6 to 7cm longer than the current Deutz engine. We will work to make the AGCO Power engine more compact," he added.
He added, "The AGCO Power engine is unique to AGCO and that includes all brands. It is important for a manufacturer of farm equipment to have complete access to the engine to control it 100% so that we can show our strength and really differentiate." And he added with a further dig at Claas, "I would not like to be in a position where transmission/axles come from MF, engines from John Deere and your cab from a combine, this is not a good solution. I think nobody does it because it such a stupid idea."
Asked about hints of connections with the Japanese tractor maker Kubota, he said, "We could sell our business to Kubota if they pay $20 billion and then we would go and buy John Deere, because I think that John Deere needs better management."
He announced that AGCO had hired the head of VW engineering to develop platform solutions for the AGCO ranges in particular MF and Valtra but not for Fendt. "VW is well positioned with the differentiate bands with a lot of common parts. We want to increase the use of common parts for platform solutions in future years, added AGCO chief Martin Richenhagen.
The new tractor platform will be available in two to three years starting with a smaller commodity tractor, which he claimed will be the most modern tractor in this segment. "We are developing the tractor from scratch, not something bought cheaply from China, starting at 60hp," he added.
On the tracked Challenger brand tractors, Martin Richenhagen said that these tractors need a facelift. He said that they would like to source more components for the Challenger tractors within the AGCO Group because, "while the main components for the Challenger from CAT, it is a great company but a lousy supplier to third parties they are always late, expensive and slow in development."
He said that AGCO could add milking robots or irrigation lines to the current range. "If Westfalia was available we would buy it, and distribute through the same channels," he added.
Source: Argentine Beef Packers S.A.