Agco warned of further pain in farm equipment markets as the maker of Fendt and Massey Ferguson tractors unveiled a 90% slump in earnings, with its North American division returning to the red.

The machinery group said that "weakening farm economics" would continue to hit Western European sales, following a quarter marred by an "accelerated slowdown" in France and Germany, the region's two biggest markets.

In North America, demand from professional farmers would "continue to soften" while, in South America, the hangover from drought was continuing to dent Argentina takings.

Dairy hit 

"Reduced farm income expectations and the weak global economy have dampened worldwide industry demand for farm equipment, with no improvement expected in the fourth quarter," Agco said.

Martin Richenhagen, the Agco chairman and chief executive, added that the cut in farm incomes fostered by low commodity prices was "resulting in weak equipment investments across the farm sector".

Sales to dairy and livestock farmers, who had been particularly hard hit by falling consumer demand, were at "very low levels".

Ahead of forecasts 

Agco said a 32% slump during the July-to-September quarter in North American sales was led by the lower horsepower tractors favoured by livestock farmers.

The fall landed the division with a $2.8m operating loss for the period.

In Europe, Agco's biggest market, sales tumbled by 35%, with operating profit slumping by 75% to $28.2m.

Group earnings tumbled to $10.0m, equivalent to $0.12 a share, on sales down 33% at $1.40bn.

Nonetheless Agco, which has unveiled three profits warnings this year, said it was on track to hit a full earnings target of $1.30-1.50 per share.

The third quarter results were also ahead of forecasts of Wall Street analysts, who had forecast the group barely reaching breakeven, on sales of $1.38bn.

Agco shares stood $0.10 higher at $28.75 in afternoon deals in New York.