AGCO took a transformational step in its technology transformation in 2023 with the announcement of a joint venture (JV) with Trimble, which, when it closes, is expected to create an industry-leading global mixed-fleet precision ag platform to better serve farmers and original equipment manufacturers (OEMs). Combined with award-winning equipment and solutions, the highest levels of employee engagement and customer satisfaction, increased market share and record earnings, our teams around the world made significant strides in 2023 to advance AGCO and agriculture.

A Third Consecutive Year of Record Performance

Our Farmer-First strategy continues to deliver strong results. During 2023, we achieved new highs in net sales, earnings per share and adjusted operating margins. We reported net sales of $14.4 billion, an increase of approximately 14% from the previous year. Reported earnings per share was $15.63 and adjusted earnings per share was $15.55, reflecting increases of approximately 31.7% and 25.2%, respectively, from 2022.

Adjusted operating margins reached 12%, an increase of 170 basis points compared to 2022 when we grew margins to just over 10%, which was a milestone at the time. We concluded the year reporting the sixth consecutive quarter of adjusted operating margins exceeding 10.5%. The performance illustrates how we have structurally transformed our business as we move closer to achieving our midcycle 12% operating margin target.

The continued strength of our results also enables us to keep rewarding our shareholders. During 2023, we increased our quarterly dividend 21% to $0.29 from the previous year and, for the third consecutive year, declared a special variable dividend reflecting our strong financial position.

We Win When Farmers Win

Underpinning these results was the effective execution of our Farmer-First strategy, anchored in a focus on margin-rich opportunities: globalizing a full line of Fendt-branded products, expanding our precision ag business and growing our parts and service business.

Of those three, the largest contributor in 2023 was the globalization and full-line product rollout of our Fendt premium brand. We continue to increase market share outside Europe through a step-by-step dealer expansion. In North America we have increased market coverage from about 40% to approximately 80% over the last five years and expect to grow that coverage up to 95% over the next several years; we will follow a similar path in South America. With expansion comes growth. Notably, in 2023, our Fendt-branded sales in those markets increased over 90%, nearly reaching our five-year growth target of $1.5 billion ahead of schedule.

The Power of Precision

A commitment to innovation and new product development is foundational to our growth agenda. We have increased our investment in engineering and research and development (R&D) by 60% since 2020, with about 65% focused on smart machines and clean energy since 2021. New patents and new product launches are accelerating — with an increase in first patent filings of 90% over the past five years — all in pursuit of one clear vision: to become farmers’ most trusted partner for industry-leading smart farming solutions.

AGCO is a leader in precision agriculture, offering solutions that enable farmers to increase both profitability and sustainability. Uniquely, we focus on retrofit first and OEM solutions for all farmers, regardless of the brand of equipment they own, transforming their equipment into smarter, more efficient machines and implements.

The most important 2023 milestone in our technology journey was the agreement to acquire an 85% interest in Trimble’s portfolio of agricultural assets and technologies. The JV, expected to close in the first half of 2024, conditional on regulatory approvals, will provide farmers more comprehensive technology offerings around guidance, autonomy, precision spraying, connected farming, data management and sustainability.

By combining the cornerstones of our precision ag portfolio — the JV and Precision Planting — we will be positioned to drive outsized growth and provide next-generation technologies to even more farmers around the world.

Also in 2023, we further enhanced our precision ag capabilities through an agreement to acquire digital assets from FarmFacts GmbH, a leader in farm management information software. FarmFacts specializes in software for farmers and service providers to generate field action plans from prescription maps to guidance line creation.

Investing in startup companies, incubators and higher education and research institutions is an important way we fuel innovation. To this end, we launched AGCO Ventures in 2023, formalizing our approach to sourcing and funding new and early-stage technologies focused on ag technology, environmental and alternative fuel sources, and information management and analysis to support farmers worldwide.

Global Parts Performance Drives Growth

The third area of focus for high-margin growth is our global parts and service business. In North America and Europe, we lead the industry in parts fill rates — having the right parts in the right place when the farmer needs them — and in South America, we have made significant progress toward achieving a similar leadership position.

We are also helping dealers become more proactive with their service and parts offerings through expanded digital capabilities that leverage the growing number of connected machines, which now total about 75,000. Our digital tools can flag performance issues before they become problems — information that, when shared with farmers, helps them stay productive in the field. In addition, connecting dealers with digital tools that enable them to manage inventory and have the right part at the counter when the farmer needs it has contributed to 9% average growth in our parts business over the past four years — double the rate for the four years prior.

Optimizing the Portfolio

Another way we are transforming our business is by optimizing a respected legacy brand — Massey Ferguson. Over the past three years, the brand has increased its top line by 90% and grown profitability, driven by new product introductions, dealer network transformation, and improving product quality and farmers’ experience with the brand.

As part of our broader portfolio transformation, in 2023 we announced we were placing our Grain & Protein business under strategic review. We will assess all strategic options to ensure our Grain & Protein customers are serviced in the best way possible and that the business is best positioned to maximize its full potential.

A Path to Decarbonization

We are passionate about making a positive contribution to society and the environment while facilitating a pathway to global food security. Notably, we are taking robust action to reduce greenhouse gas emissions in both our own operations and our value chain, and recently announced new targets to reduce Scope 1 and 2 emissions by 55% by 2033 and 90% by 2050.

Beyond our own emissions, AGCO and its brands are focused on sustainably maximizing farmer impact and value with products and technologies, including automated features that enable smart farming, tractors that reduce soil compaction and AGCO Power CORE engines that run on sustainable fuel. We are also developing a climate transition plan that will detail how we intend to decarbonize both our operations and value chain, to manage climate-related risks and to execute a strategy to mitigate those risks.

The Team behind Our Farmers and Our Growth

Foundational to our Farmer-First strategy is a Farmer-First culture. Our nearly 28,000 employees around the world are united by a common set of Cultural Beliefs that put our farmers’ success at the center of everything, raise challenges, debate respectfully and maximize results through teamwork and aligned actions. AGCO is intent on being not only the investment of choice and partner of choice of farmers, but also the employer of choice as measured by employee engagement. We have set a 2025 target to achieve 75% employee engagement, and in 2023 our trajectory continued upward, with our engagement score increasing to an all-time high of 71%.

We are immensely grateful to this committed team around the world for delivering another record-breaking year. Putting farmers first is creating a more valuable enterprise and enhancing value for all AGCO stakeholders.