Agco shares rose after the maker of Fendt and Massey Ferguson tractors nudged higher its profits forecast, as a cost cutting drive helped agricultural equipment group limit the dent to its margins from a dent to sales from weak farmer spending.
Shares in the US-based group, which was on Monday upgraded to "neutral" from "sell" by Goldman Sachs, rose by more than 3% in early deals, after it raised its 2015 earnings forecast, and reported higher-than expected earnings for the three months to June 30.
"During the first half of 2015, lower commodity prices and the expectation of reduced farm income have pressured global sales of farm equipment," said Agco chief executive Martin Richenhagen.
"Grain prices continue to be highly sensitive to 2015 crop production forecasts and will likely remain volatile throughout the growing season," he added.
Agco upgraded its forecast full-year earnings per share to $3.10, from the $3.00 per share forecast in April.
The group left its 2015 sales forecast unchanged at $7.7 to $7.9bn, with margins forecast below 2014 levels.
The group's adjusted net income over the three months to July 30 was $1.25 per share, compared with $1.77 over the same time last year, compared with analysts' estimates of $1 per share.
Agco has been cutting costs, with weaker global demand for agricultural equipment and the exchange rare losses expected to continue weighing on Agco's sales through 2015.
Agco reported net sales of approximately $2.069bn for the three months to June 30, down 25% from $2.70bn over the same period in 2014.
Excluding the effect of exchange rate losses, sales were down 11% from last year.
Sales over the first six months of 2015 were down 13% excluding currency effects.
Agco cut its production hours by around 22% in the three months to June 30, compared the same time last year.
"Agco's performance demonstrates our ability to deliver solid results in a weaker industry environment. The quarter was highlighted by the successful reduction of our expenses and company inventories," Mr Rechenhagen said.
Equipment sales were down across of its major operating regions.
Excluding currency effects, Agco's North American sales were down 20.5% in the first six months of 2015 compared to the same period last year.
"Industry retail sales in North America declined with a significant drop in high-horsepower tractors, combines and sprayers," said Mr Richenhagen.
"Growth in hay and forage equipment and small tractors, due to healthy conditions in the livestock sector, has provided a partial offset to the decline in large agricultural equipment," he added.
Net sales in South America were down 14.3% in the first six months of 2015, excluding currency effects.
Sales in Brazil were down, although sales increased in other South American markets, including Argentina.
"Reduced industry sales in South America were the result of lower demand in Brazil due to softness in the sugar sector, weakness in the general economy and changes to the government financing programme," Agco said.
Net sales in the Asia Pacific region, and the Europe, Africa and Middle East regions were also down.
In Europe, "sales declines were the largest in Germany, Scandinavia and Russia," Agco said, while Asian earnings were hit by "lower sales and increased market development costs in China".
Agco cited narrow margins for dairy producers sapping demand from the European row crop segment.
Agco shares traded up 0.6% at $52.09 a share in mid-morning deals in New York.