Manufacturers of agricultural machinery, tractors and other machinery have had a record year in terms of turnover and profit. Parts may be very scarce, but the European machine builders know how to sell a lot of technology.
It can certainly be called special. The corona pandemic has caused enormous disruption worldwide. The simplest parts have become scarce, container transport has risen hundreds of percent in price and almost all raw materials have become significantly more expensive. You also notice this in the prices of tractors and agricultural machinery. Anyone who has requested a quote in the past six months - whether for a simple tedder or a complex potato harvester - probably had to recover from the shock. Price increases between 10% and 20% are not uncommon.
Farmers and contractors invest heavily
In 2021, European farmers have benefited from higher price levels for their products – especially for grains, oilseeds and milk – while the biggest cost increase only came at the end of this year. Contractors have also invested heavily. Manufacturers all cite this as a reason why they have sold more machines. Most European companies have now published their annual figures.
Record turnover Lemken
Lemken draws one sales increase up from 22%. Good for €446 million, the highest amount in their 242-year existence. And this despite the lack of the crop protection branch, which has compensated for higher sales of sowing machines. In the meantime, Lemken is building a new factory for the Dutch Steketee in Dinteloord. It should be opened in the third quarter of 2023.
Conculega Amazone also did well with one revenue growth from 15% to €537 million. Just like its blue brothers, it means that more machines have been sold both within Europe and to North America. Amazone is also building more production capacity to meet the demand for machines. The German Krone is also doing good business in the livestock sector. Turnover increased 11% to €814,3 million from the agricultural branch.
The Swedish Vaderstad has a quarter more turnover in its books for 2021. Good for €420 million. Profit increased from €19 million to €40 million. Besides Europe, Canada is the largest sales market for the brand, followed by Russia. Ukraine is in fifth place. The financial figures for 2022 could therefore turn out very differently for the company.
Question from China for Kuhn
These are probably exciting times for Kuhn too. At the beginning of this year, it announced that it had invested €10 million in a factory in Russia. It has not announced what it is currently doing with this. Bucher Industries, the Swiss parent company of the Kuhn group, did well in 2021. Kuhn saw his revenue increase by 20,5% to €1,294 billion. Both turnover and profit are record high. In addition to high demand in the well-known markets, Kuhn also did well in China.
Kubota, the owner of Kverneland Group, has not yet announced financial results for 2021. In the fourth quarter of last year, gross turnover was 18,5% higher than a year earlier. Other international machine manufacturers are also performing well. Agco achieved 2021% more turnover in the fourth quarter of 16. The total number of sales over the past year was more than a fifth higher.
Even John Deere managed to squeeze out a turnover growth of five percent in the first quarter of the 2022 financial year (until February 1). That amounted to $1 billion in Q9,6. Profits fell by a quarter, mainly because the company in the US was plagued by a long-term recession staking.
Manufacturer stock prices recovered
Since the corona pandemic, stock traders have sought refuge in agricultural machinery manufacturers. Share prices have shown a significant increase since the beginning of 2020. The end of March became an absolute record reached. Deere & Co listed a price of $25 per share on March 436,53. An increase of 19% compared to a year earlier and 30% more than just before the outbreak of the Ukraine war. Agco is also doing well. At the end of March, the share price again approached the record level of $147,99 a year earlier. After the outbreak of war, prices fell and then rose again during March. At the beginning of April, the price has now fallen a few percent again.
It is still difficult to say to what extent the war in Ukraine will affect machine manufacturers. The damage is probably much greater than is currently clear. Not only because of the inability to supply agricultural companies in Ukraine, but especially because of the lack of the Russian market. Almost all manufacturers have made a lot of money there for fifteen to twenty years. Due to the politics in the country, local factories have been started up, assembly locations or partnerships have been entered into with local players. Unlike Heineken and Shell, for example, the machine builders are not pulling back yet, but for how long? The loss of the Russian market - and therefore also that of friendly nations - is a great loss for manufacturers.
Manufacturers optimistic
The European business barometer of the umbrella mechanization organization Cema showed no signs of trouble at the end of March. 150 European manufacturers expect to achieve an average of 5% more turnover than last year (which was already a record year). The situation in Ukraine is indeed causing less sales, but manufacturers think that other parts of the world are compensating for this. Sales to Russia, Belarus and Ukraine account for a total of 5% of the turnover of all European manufacturers. Relatively little.
Finally, the shortage of parts has still not been resolved. Of the companies surveyed, 70% of tractor manufacturers and 80% of combine harvester manufacturers expect to have to stop production this month due to a parts shortage. Price increases are also a major problem for the sector.