STRATEGIES

The future? Growth and innovation

AGCO-FENDT IS IN LINE WITH THE MEDIUM-TERM TARGETS OF ITS STRATEGY BY 2020…

The atmosphere that reigns at AGCO’s is neatly positive: according to the data presented at the international press conference recently held at the Fendt Forum in Marktoberdorf by the president and CEO of the Group, Dr. Martin Richenhagen, markets are recovering. Where the general situation still shows a negative sign, too, like in East Europe, the numbers of AGCO are instead positive. Net sales amounting to about 8 billion US$ is what expected by the Group in 2017, with a profit per share of approximately 3 US$. These growths – explains Richenhagen – mirror the company’s efforts to improve the productivity in its sites, to invest in new technologies, to release new products and to develop new markets, to reach one of its most important targets: to be the number one also in customers’ perception. Concerning the EME (Europe and Middle East) region, the net sales of the first six months of 2017 have grown by 4.6% compared to 2016, reaching 2.16 billion US $. And this, as underlines Rob Smith, Senior Vice President and General Manager AGCO EME, when in west Europe the global market of tractors is affected by -3%. «Our target is growing and we are succeeding in it well» he states. The most interesting trends in the region were registered in Germany, United Kingdom and Italy. Concerning Europe, the economic context has constantly improved in the last twelve months. After a recession phase that lasted three years, the CEMA Business Barometer has highlighted a recovery, month after month since the autumn 2016 and now the expansion is stable, even if increments have decreased in the last months. As far as tractors and Fendt brand are specifically concerned, the target of rising the market share to 10% in the central and west Europe region has been widely exceeded in 2017. Very satisfactory are the markets of France, Great Britain/Ireland and Italy. Even if the sector of agricultural machines has coped with sometimes relevant market drops, in 2016 13,667 Fendt tractors were sold. Within the end of 2017, they plan to reach the sale of 15,000 Fendt tractors, scoring the 12% positive sign. «Very comforting is the international appreciation of the new flagship series Fendt 1000 Vario of which the company is going to deliver the thousandth one within the end of the year, thus reaching its targets for this line in advance» states Peter-Josef Paffen, Vice President Brand Director Fendt EME. In the range of harvesting machines, Fendt intends to increase further the sold units and the market shares. In the first complete year of sales of Fendt harvesting machines (Fendt combine harvesters, Fendt tedders and Fendt side-delivery rakes) over 1,000 units will land on the market by the end of 2017.

Optimizations in the distribution net

To face adequately the growth target set by the company, they deemed opportune the introduction of some modifications in their structure and the optimization of the distribution net on the territory of the EME region, in order to make it comply with some fundamental principles in the AGCO strategy, that is to say the brand exclusivity, the total coverage of full line products, separated in Massey Ferguson and Fendt/Valtra channels, the proximity to customers and the best service availability. All that while reaching an interesting turnover for players themselves, in order to justify the demanded exclusivity. These optimizations started in 2014/2015 and they are already giving their fruits. Today, in Germany, for instance, 90% of AGCO distributors are exclusive, 85% offer also AGCO harvesting machines, 80% offer in separate Massey Ferguson or Fendt/Valtra channels; 80% reach a turnover of about 7 million $ with AGCO only. The targets are more ambitious and by 2020 they aim at an exclusivity and a full line distribution by 100%. The same strategy is reaping its fruits also in other Countries. In Poland, for instance, where they are setting up a full line and exclusive sales net; in Great Britain, where they are strengthening the two-channel structure Massey Ferguson and Fendt/Valtra; in Ukraine, where the steeply rising market phase is suiting AGCO’s distribution concept.

Strategies to widen the market

Becoming a full-line supplier is one of AGCO-Fendt’s targets; takeovers and joint ventures are targeted to this goal. The takeover of Lely company precisely conforms to this strategic line. When the sale negotiations of the harvesting machine sector with Lely will be successfully accomplished, Fendt will enrich its harvesting machines with a programme of self-loading forage wagons, starting with the two models Fendt Tigo XR and Fendt Tigo PR. Besides, it will be possible to enlarge its range of balers for round bales with fixed and variable chamber. The takeover in Brazil of Kepler Weber S.A., leader in the processing and stocking of cereals, will strengthen the ranking of AGCO Group in in South America. Finally, the Joint Venture with the Thailand company CPF – Charoen Pokphand Foods, leader in the breeding of pigs, chickens and in the production of eggs, will allow AGCO to expand in the Asian market, too, supplying also third parties.

Innovation, growth engine

Innovation is an important part in AGCO’s growth strategy and the Company has never economized in this ambit, neither in crisis years. In 2016 AGCO invested around 300 US$ in Research and Development for new products and to improve the existing ones. In the Group, Fendt is one of the most active brands in Research and Development. The Marktoberdorf centre employs 400 engineers who work at new designs and at the optimization of the ranges of tractors and forage harvesters. After years of constant investments ranging from 60 to 62 million Euros, in 2017 they exceeded 65 million Euros. Digitalization and interconnection are one of the themes at which they work with alacrity. «I believe – states Peter-Josef Paffen – the agricultural mechanization is facing the greatest revolution it has ever lived since when it was born. In the next years, we will witness fully different operational technologies and modalities from what seen until now. This is anyway necessary, to be able to accept the challenge of modern agriculture». AGCO-Fendt has embraced this trend. The interconnection of forefront machines and the combination with several other information sources allow supplying and collecting in time always precise data, which are correlated and analysed by smart systems of Farm Management. These new technologies will notably boost the creation of added-value for agricultural machines and equipment. Precisely in Marktoberdorf they are organizing the central digitalization team with about 100 new workplaces for digitalization only. «It is a great opportunity for the Group, for Fendt and for our region» states Paffen.

PROSPECTS BY 2020

By 2020, Fendt brand has implemented its strategy – the Fendt Strategy 2020. The target is a global sustainable growth to 20,000 tractors and a comparably high growth in all sectors of full line Fendt harvesting machines in 2020. Concretely, the issue is to go on performing the four main essential action fields for the company: total quality, not only of products but also of processes, structure and relationships; Full Line programme, to be able to offer a complete portfolio to customers and distributors; Exclusive full line distribution net; Innovation, not only to offer something new, but also always something better.

 

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