Not many farmers caught in the economic stranglehold caused by the coronavirus pandemic are shopping for new ag implements these days.
And that’s sending shockwaves through the equipment industry.
Nine out of 10 equipment manufacturers say the COVID-19 pandemic has had a very negative impact on the economy while more than half believe it’s had a very negative impact on the industry overall, according to a survey conducted by the Association of Equipment Manufacturers (AEM).
“The COVID-19 pandemic has had an unprecedented impact on equipment manufacturers and the 2.8 million men and women of our industry,” said Dennis Slater, president of AEM.
“Even before the current crisis, equipment manufacturers were facing challenging times as a result of the protracted trade war with China, the mounting infrastructure crisis and a decline in commodity prices,” he noted. “The COVID-19 pandemic has managed to turn an already dire situation worse.”
Recent financial results posted by top manufacturers speak volumes. Ninety percent of executives surveyed by AEM cite a decline in demand for equipment as the primary impact of COVID-19 on their business.
Caterpillar, with a base in Peoria and home office in Deerfield, reported first quarter sales and revenue decreased 21%, with profit per share down 39% as of April 28. The lower sales volume was driven by declining end user demand and the impact from dealers’ inventories.
Moline-based Deere & Co’s most recent quarter ended Feb. 2, prior to the economic shutdown in the U.S., and net income as of that date ($517 million) was up from $498 million from the previous year.
However, worldwide net sales and revenue decreased 4% in the first quarter while many analysts expect Deere’s earnings per share could drop off substantially in its May 22 report.
AGCO reported net sales in its first quarter declined 3.4% to $1.9 billion as of May 5.
“AGCO’s current priorities are the safety of our employees and serving the world’s farmers as we do our part to minimize the impact of the COVID-19 pandemic on the world’s food supply,” said Martin Richenhagen, chairman/president and CEO of AGCO. “We are facing a very dynamic environment” that’s creating “challenging conditions.”
CNH Industrial reported consolidated revenues of $5.5 billion in its first quarter as of May 6, down 15% from last year with a net loss of $54 million compared to net income of $264 million in the first quarter of 2019.
The losses are due to the impact of COVID-19 coupled with previously announced actions to reduce dealer inventory levels.
The majority of respondents to the AEM survey, eight out of 10, say the federal government should prioritize a significant investment in the nation’s infrastructure to help equipment manufacturers through the crisis and rebuild the economy.