AGCO Signs Deal With Digital Agriculture Firm Solinftec

Zacks Equity Research

AGCO Corporation AGCO recently entered into a commercial and technological partnership with a leading developer and distributor of digital agriculture solutions, Solinftec. AGCO customers will be provided direct access to Solinftec’s portfolio of solutions, including soil sensors, on-board computers, telemetry networks, weather stations, proprietary algorithms and the real-time generation of actionable insights, producing agronomic efficacy and operational efficiency.

In the beginning of 2019, the new solutions will launch in Brazil for sugarcane, soybean, corn and cotton growers. Moreover, the new solutions will be rolled out for the 2020 crop cycle for soybean and corn growers in the United States.
 
Notably, Solinftec’s offerings will complement the fleet and farm solutions, which are available through AGCO’s Fuse smart farming portfolio. Fuse’s smart farming includes transparent partnering model that provides flexibility to farmers according to their choices of service providers, farm management, and agronomic software and machinery.

Over the past 11 years, Solinftec has brought solutions to its clients that capture and process online and real-time data, while also focusing on improving farm’s operational ecosystem. Solinftec solutions comprise various layers of hardware, software and telecommunications. In addition to these layers, it has developed a wide suite of software and algorithmic solutions to solve challenges related to specific crop and region. Solinftec has captured 60% of the sugarcane market in Brazil through these solutions.

AGCO, which is among the prominent Manufacturing – Farm Equipment industry, along with Titan International, Inc. TWI, Deere & Company DE and Lindsay Corporation LNN, has reaffirmed its net sales 2019 outlook at $9.6 billion, owing to improved sales volumes and positive pricing. It anticipates gross and operating margin to improve from the 2018 level, backed by positive impact of pricing and cost reduction. Considering these, the company expects 2019 earnings to come in at around $4.60 per share.

Additionally, AGCO expects industry demand in South America to improve in the ongoing year from the prior-year level. Supported by favorable wheat prices and crop production, farm economics are expected to improve modestly across Western Europe, leading to relatively stable demand in European markets. However, farm income in the United States remains under pressure due to lower commodity prices.

AGCO has been consistently making strategic investments to enhance and expand its product lines, upgrade system capabilities and improve factory productivity. In a bid to execute the product-development plan and meet the latest emission requirements in Brazil and Europe, the company intends to maintain its level of investment in 2019.

AGCO Corporation Price and Consensus

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