Agco flagged pressure on the farm equipment market from weather setbacks – but in Europe rather than the US – as it downgraded its hopes for full-year profits following growth over the summer which fell short of Wall Street hopes.

The maker of Fendt and Massey Ferguson machinery - which in July raised its target for 2012 earnings per share to $5.50-5.75 - on Wednesday reversed course, cutting its guidance to $5.20 a share.

The downgrade, to a figure below the $5.71 a share that analysts have pencilled in, followed a July-to-September period in which underlying sales growth – stripping out currency impacts and acquisitions - slowed sharply, to 9.9%.

Underlying sales in the previous quarter grew by 14.7%.

The group, which also lowered its full-year sales target to $9.8bn-10.0bn, acknowledged teething problems at a revamped Fendt plant in Germany, and "softer demand" in parts of Europe affected by poor weather conditions.

Acgo shares closed 4.3% lower at $45.51 in New York.

'Demand is trending weak'

"In Europe, a mixed weather pattern is partially offsetting attractive crop prices," Agco said, reporting regional sales of $1.06bn, representing underlying growth of 5.2%.

"Industry demand is trending weak in the weather-impacted markets of southern Europe, Scandinavia and Finland."

Previously, the industry's concerns have focused on the US, and fears that the dent to yields from drought would cut growers' spending, although Agco echoed comments earlier on Wednesday from rival CNH Global, that high crop prices were offsetting the impact of disappointing production.

However, Agco did flag "softness in demand" for both grain silos in North America, with small crops decreasing storage requirements, and for protein production machinery, a reflection of the cutbacks in the livestock industry forced by high feed prices.

Official data have shown cattle placements on US feedlots at their lowest level for the month since records began in 1996, while latest weekly data showed egg sets for hatching into broiler chickens at their lowest in more than five years.

Regional gaps

Agco is more exposed to Europe than the other tractor giants, with the region, with Africa and the Middle East, accounting for typically for some 50% of group sales.

Its $940m takeover of GSI a year ago has also boosted its exposure to the storage and crop processing markets.

However, it was for Asia and North America that the group relied on sales growth in the latest quarter.

In South America, "after a slow start due to dry weather early in 2012, improved crop conditions, attractive government financing programmes in Brazil and favourable grain prices are all sustaining industry demand," Martin Richenhagen, the Agco chairman and chief executive, said.