Agco trumped rival CNH Global by lifting its full-year earnings target, forecasting a continuation of the sugar-backed surge in Brazilian demand which contributed a big sweetener to group sales.

The maker of Massey Ferguson and Fendt machinery said that it expected its earnings to hit $1.85-2.00 a share for the year, compared with a previous target of $1.65-1.75.

The increase, higher than the $1.74-a-share estimate that Wall Street has pencilled in, reflected higher hopes for margins after a series of cost cuts last year, when the credit crunch squeezed demand for farm equipment.

Agco also said it expected industry conditions to remain "strong" in South America, where sales in Argentina have been supported by better farming conditions, after the drought a year ago, while demand in Brazil had risen "sharply".

'Record levels'

"Improved economics for sugar cane growers", after prices soared to $0.30 a pound in February, and regained strength last month, had added to government financing programmes and takings from record soybean harvests to support the Brazilian market.

Martin Richenhagen, the Agco chief executive, added: "Market demand in Brazil is currently running at record levels."

The improvement had been key to Agco limiting to 1.4%, to$1.74bn, a decline in group revenues in the April-to-June quarter, in the face of crumbling European takings.

The group's sales in Europe, Africa and the Middle East, its biggest division, slid by 15.5% to $857.9m, sapped in particular by declines in France and Germany.

"Market conditions are expected to remain weak but stable in Western Europe during the second half of 2010," the company added.

Forecasts beaten 

Group earnings for the quarter rose by 9.6% to $62.9m, equivalent to $0.66 a share excluding one-off effects.

Analysts had expected a $0.46-a-share result.

Agco shares closed 1.5% higher at $34.11 in New York.

The group's lift to its profit hopes come less than a week after rival CNH, the maker of Case and New Holland tractors, said that it was preparing to make an earnings upgrade with its third-quarter results.