Tractor makers show revenue declines
Kubota revenue down nearly 8%
On Aug. 5, Kubota Tractor released its financial results for the six months ended June 30, 2025. The company showed revenue decreased 7.9% to 1,454.9 (JPY), from revenue of 1,579.6 (JPY) over the same period in 2024. (1 USD = 149 JPY) Kubota reported North American revenue was off 18.4%, and operating profit was down 31%.
The CE market is expected to remain stable in both infrastructure and housing demand. We aim to increase market share by launching updated models of CTL. The tractor market for both residential and agricultural segments is hitting bottom and stabilizing with clearer outlook for tariffs impact.
The U.S. market outlook for 2025, Strategy for short term
- Strict inventory control aligned with the conservative outlook
- Deal with the tariff by self-initiated efforts such as controlling incentives and fixed cost
- Mitigate the additional tariff cost from this time forward by reviewing incentive program and flexible price adjustment as needed in a timely manner
Outlook: Construction machinery Equipment
- The market continues to develop supported by demand for housing and infrastructure driven by population grow
- Enhance accelerate new product development and production capability by shifting resources to CE business
Outlook: Tractor
- Accelerate business development in the mid-size category (40-100HP) which is potential market with limited players
- The small-size market grows gradually with the pre-COVID level as a baseline, in the context of population growth
- Focus on the upper-middle class prioritizing securement of stable profitability amid intensifying market competition due to new entrants
- “fundamental and underlying business”
CNH revenues down 14% for Q2
On Aug. 1, CNH reported results for the three months ended June 30, 2025, with net income of $217 million and diluted earnings per share of $0.17 compared with net income of $404 million and diluted earnings per share of $0.32 for the three months ended June 30, 2024. Consolidated revenues were $4.71 billion (down 14% compared to Q2 2024), and net sales of Industrial Activities were $4.02 billion (down 16% compared to Q2 2024).
In North America, industry volume was down 7% year-over-year in the second quarter for tractors under 140 HP and was down 37% for tractors over 140 HP; combines were down 23%. In Europe, Middle East and Africa (EMEA), tractor demand was down 7%, while combine demand was up 8%. South America tractor demand was up 4%, while combine demand was down 6%. Asia Pacific tractor demand was up 3%, but combine demand was down 42%. Agriculture net sales decreased in the quarter by 17% to $3.25 billion versus the same period of 2024, primarily due to lower shipment volumes on decreased industry demand and dealer destocking.
Global industry volume for construction equipment increased 3% year-over-year in the second quarter for Heavy construction equipment; Light construction equipment was down 2%. Aggregated demand decreased 4% in North America and South America, but increased 1% in EMEA and 3% in Asia Pacific. Construction net sales decreased in the quarter by 13% to $773 million, due to lower shipment volumes driven by the market decline in North America.
The company continues to forecast that 2025 global industry retail sales will be lower in both the agriculture and construction equipment markets when compared to 2024. CNH is still focused on driving down excess channel inventory primarily by producing fewer units than the retail demand level, which will result in 2025 net sales being lower than in 2024. The lower production and sales levels will negatively impact our segment margin results.
CNH reaffirms its previous 2025 outlook:
- Agriculture segment net sales down between 12% and 20% year-over-year, including -1% of currency translation effects
- Agriculture segment adjusted EBIT margin between 7% and 9%
- Construction segment net sales down between 4% and 15% year-over-year, including -1% of currency translation effects
- Construction segment adjusted EBIT margin between 2% and 4%
AGCO sales off nearly 19% for Q2
AGCO reported net sales of $2.6 billion for the second quarter ended June 30, 2025, a decrease of 18.8% compared to the second quarter of 2024. Net sales for the first six months of 2025 were approximately $4.7 billion which is a decrease of 24.1% compared to the same period in 2024. The first six months of 2024 included other revenue of $490.6 million which represents revenue from the Company’s divestiture of the majority of its Grain & Protein business as shown in the regional net sales table.
“The global trade landscape has become increasingly complex, with uncertainty surrounding trade negotiations impacting farmer confidence and investment decisions, particularly in North America and Europe,” said Eric Hansotia, chairman, president and CEO. “AGCO is closely monitoring these developments and remains focused on operational agility, supply chain resilience and executing our Farmer-First strategy.”
Hansotia concluded, “Challenging farm economics in the first half of 2025 have dampened demand for agricultural equipment across Europe and the U.S., with declining commodity prices and rising input costs specifically impacting U.S. farmer sentiment.”
North America
North American net sales decreased 32.2% during the second quarter of 2025 compared to the second quarter of 2024, excluding the impact of unfavorable currency translation. Softer industry sales and under-production of end-market demand contributed to lower sales. The most significant sales declines occurred in high-horsepower tractors, sprayers and hay equipment.
Outlook
AGCO now expects full-year 2025 net sales of approximately $9.8 billion. Adjusted operating margins are projected to be approximately 7.5%. Lower production volumes are expected to be partially offset by cost controls and stable engineering expenses. Based on these assumptions, full-year earnings per share are now targeted between $4.75 and $5.00. These estimates incorporate the expected impact of tariffs in effect as of July 31, 2025, along with AGCO’s mitigation strategies. Any changes to tariff policies or related responses could affect these projections.
