AGCO
#You're right.
What we're seeing in the market is along with what we see with the row crop equipment, that on the grain storage side, we're seeing conservative investment sentiment amongst farmers.
The biggest reduction is in the on-farm storage business and we're seeing fairly substantial reductions in demand there.
So we have had to lower our expectations for grain storage sales in North America for the balance of the year.
As it relates to protein, that area is up with the lower grain prices and input prices for our protein producers.
We are seeing increased demand there, which is offsetting some of the impact we're seeing on the grain storage side.
The margins on grain storage are a little better than on protein, so it's hurting our mix a little in North America, as well.
Yes, more ---+ the production cuts are larger in North America and South America and less so in Europe.
That's the most stable market that we're seeing right now.
I would say that most of the guidance, as you can tell by comparing what we had last quarter to this quarter, is fairly consistent, so the biggest difference is the tax rate change.
And that's being caused by a little change in the mix of where our income is coming in.
So we're expecting a little better results in Europe and bringing down our expectations a little in North America and that's reflected in our outlook and balancing out quite well.
But it is also improving the tax rate that we believe we'll have by the end of the year.
Yes, I believe that, that's probably a reasonable expectation at this point.
We have seen that margin ---+ margins have stayed very strong in Europe.
We have gotten a lot of benefit from our cost reduction efforts.
We've restructured some of the Organization there.
We moved a lot of our operations and our factories to one shift, which allowed us to be more productive in the facilities.
And also our material costs are being managed very well there, as well.
So with those benefits coming through, it's enabling us to offset the impact of the lower sales and lower production.
So that's a good estimate for the year.
Hi, <UNK>.
Good morning, <UNK>.
This is all baked in our number, so that means actually nothing really new to report on this.
The orders are across the board up.
I would suggest that a year ago, we were probably at a weak point in terms of orders, so the comparable is somewhat an easy comp.
But the market is down fairly consistently between 8% to 12% in most of the major markets and it really hasn't moved a whole lot throughout the year.
So it's fairly steady, which is allowing us to manage inventories, manage production quite well so far this year.
The orders that we're quoting are actual orders from our dealers and they are free orders that we get as they project out what they think they'll need to meet their retail demand in their business.
From a standpoint of trends, I would say that we're continuing to see softer orders in North America and in South America.
Those markets continue to show a lot of weakness, particularly on the large equipment, the row crop side of the business.
We are seeing a stronger order situation in hay equipment and small tractors in North America.
And then in Europe, again, the orders were relatively weak this time last year and so they are stronger and enabling us to have pretty good visibility into the third quarter in Europe.
I would say that, that's a big contributor is the pricing versus the material cost.
That's probably the biggest contributor.
Also, I would say a lot of the cost reduction actions that we took benefited Europe maybe more than some of our other regions.
So that's also a contributor.
And then in the second half we actually see the mix improved a little.
If you recall last year, we produced fairly heavily in the first half of the year and then started making cuts in the second half.
This year, we were much more cautious coming into the year and our production, as you can tell from our production stats, was fairly low in the first half of the year, and so our comparables in the second half versus 2014 are a little easier and so that will enable us to look like ---+ have our margins look pretty good in the second half versus last year.
Well, actually, when it comes to market share, globally we are doing pretty well, so we are gaining share basically in most of the markets, no big gains, but smaller ones.
We are optimistic that we can do similar things also in the future because we have certain new products coming in between this year and around 2018, so therefore I'm optimistic that we can gain market share in Europe, South America, but also here in North America.
What <UNK> is saying is certainly true, but we also have a very structured and systematic approach to our parts business and we will show this trend also in the long run because we think we can do better in our parts business and sell more original parts through our distribution network in the future.
Well, first of all, I do not see more uncertainty as of today.
Second, we don't talk about 2016 yet.
And third, we have basically a very conservative plan and, therefore you should not see any major changes in the fourth quarter of 2015.
One is we had peaked in CapEx, as you might remember, and we have planned for a reduction already starting two years ago or something like that, we started to talk about it.
Second, we think that a normal usual demand would be flat compared to last year and this year, around $300 million or something.
And third, worse case, we could maybe spend less, and that means maybe 10% or something like that.
Our factories are all in very good shape.
We did where we think we need it so therefore it is not an area of concern for Management.
Yes.
We do, as you know, <UNK>, generate a lot of our cash offshore with the high profitability of our European and South American businesses.
And so one of the things that we do have to focus on is finding ways on a tax efficient basis to get the cash out of those subsidiaries, back into the US in order to fund dividends and share repurchases.
We did a major repatriation of earnings and brought cash back over about a year ago and that was very successful and we believe that we have more potential to do that again this year, as well.
So right now, we're not in any situation where we're worried about continuing to have trouble funding the share repurchases.
We think we have enough tax efficient strategies that we can employ to get the cash back and to fund our share repurchases on an efficient basis.
This being said, the US needs to consider the unique tax laws and we need a tax reform for sure.
Business needs to get a change in repatriation of foreign earnings.
Thanks, <UNK>.
Some of the ---+
Within the next three years, you should see basically the results of the investment we made in small tractors for mainly Massey Ferguson, but also Valtra and some also for Challenger.
You should see some positive results from the hay and forage business we bought some years ago in Germany, which now we start to get ---+ you see more traction in distribution and you will see more because also we will use this product in combination with Fendt and Fendt will be developed more and more in a [tool full liner] and you will see more new product in the area of harvesting in the next years.
Normally, you should see those numbers go down.
The more efficient you are in production and in your Supply Chain management, the shorter that time frame should be.
Yes, you're welcome, but it's still a very good question (laughter).
