AGCO Corp., the Duluth-based agricultural equipment manufacturer, has reached a deal to sell 306 Valtra tractors to the government of China‘s Heilongjiang province.
AGCO will deliver the order to China’s northernmost province by the end of the year. Heilongjiang borders Russia in China’s far northeast and is known for its frigid winters.
Along with the sale, AGCO will train more than 1,000 local farmers on how to use and maintain the tractors. The effort is in part to help modernize the province’s agricultural sector, according to an AGCO news release.
The sale builds on previous business with Heilongjiang’s government.
“We have previously supplied large quantities of the same unit, so history is good in China and the machine specifications match their requirements,” said Eric Raby, AGCO’s vice president for sales and marketing for Eastern Europe and Asia. “The largest crops in the province are corn and wheat, and these units will be used for mainly cultivation.”
The financial terms of the deal were not disclosed in the release, but AGCO executives told GlobalAtlanta that the overall deal was larger than just the portion that the company won.
“The deal was larger, and we lost some segments to other competitors and/or companies who offered units that we have no analogues for. The 306-unit tractor segment that we did win was the largest single tractor segment, however,” Mr. Raby said.
Valtra, based in Finland, is a global tractor brand that AGCO acquired in 2004. The company makes tractors in Finland and Brazil. Valtra tractors are made so that buyers can customize them to meet specific farming needs, according to the company’s Web site.
The Finnish newspaper Helsinki Times reported Sept. 17 that the tractors in the China deal, Valtra’s T191 HiTech model, will be made at the company’s factory in Suolahti, Finland.
By revenues, the Asia-Pacific region is AGCO’s smallest market, but recent figures indicate that it has been the company’s most resilient international market as sales have slumped during the worldwide recession.
AGCO’s Asia sales were $53 million in the second quarter ended June 30. That’s a 16.8 percent decline compared with last year, without taking into account the effects of currency conversion. Using the same measure, South American sales dropped 40 percent to $227 million, and Europe, Africa and the Middle East – which the company lumps together – declined 28 percent to a little over $1 billion.
On Sept. 16, the company updated its 2009 outlook, saying that net sales compared to 2008 are now expected to drop 23 to 25 percent for the year, a more severe slide than previously expected, thanks largely to decreased demand in Europe. The company also revised downward its expectations for third-quarter sales, which it said will be 30 to 35 percent less than last year.
