Agco braced investors for its first quarterly loss for more than three years as the maker of Massey Ferguson and Fendt tractors warned of "further weakness" in its core Western European market.

The agricultural equipment maker revealed further production cuts aimed at driving a reduction of inventories beyond the $550m cut, to $1.9bn, achieved last year.

"We have more work to do with our inventory reduction initiatives," Martin Richenhagen, the Agco chairman and chief executive, said.

"These temporary closures will negatively impact our first quarter 2010 results."

The company forecast an unspecified loss for the period. Agco has not reported a loss since the last quarter of 2006.

'Very low demand' 

The announcement came as Agco braced for "weaker conditions" in the first half of the year in the Western European and North American markets.

However, the Brazilian market, which witnessed a 26% jump in cross-brand tractor sales in the last three months of 2009, would remain buoyant.

And, forecasting a stabilisation in North America and Western Europe markets later in 2010, the group edged its forecast for full-year sales higher to $6.6bn-6.8bn, from $6.4bn-6.6bn.

Weaker markets

North American sales slumped 40% to $311.5m in the quarter, although thanks to a 31.0% pick-up in South American takings, group sales fell by a more modest 14.1% to $1.85bn.

Earnings slumped 65% to $34.4m, equivalent to $0.42 a share, once one-off costs were stripped out.

The figure beat Wall Street forecasts of a $0.31-a-share result, helping Agco shares end 4.5% higher at $31.81 in New York.

The data were "solid operating results during a very challenging period", analysts at US broker Sterne, Agee & Leach said.