Agco 1st-quarter profit jumps, tops estimates

CHICAGO (Reuters) - Agricultural equipment maker Agco Corp AG.N reported stronger-than-expected quarterly earnings on Tuesday as sales grew by double digits in nearly all its regional segments outside North America.

The company also raised its full-year guidance, saying strength in South America and Eastern Europe would more than offset growing weakness in North American demand for smaller tractors.

Ann Duignan, an analyst at Bear Stearns, said Agco's combine sales were a standout during the quarter, outperforming rivals in both North and South America, and she predicted the market would "react favorably" to the results.

But the good news from Duluth, Georgia-based Agco was overshadowed by concerns about wet weather in the United States, which has created bad conditions for corn planting and dragged the whole agricultural equipment sector lower.

In a report released on Monday, the U.S. Agriculture Department said that only 10 percent of the corn crop had been planted so far, down from 23 percent last year and a five-year average of 35 percent by this time.

The news pulled Agco and rivals CNH Global (CNH.N) and Deere & Co. (DE.N) lower in early trading on the New York Stock Exchange. All three companies have seen their profits rise, and shares surge, as a result of the push to develop corn-based ethanol and other biofuels, which has sent commodity prices soaring.

Agco said its first-quarter net profit more than doubled to $62.3 million, or 63 cents a share, from $24.5 million, or 26 cents a share, a year earlier.

Analysts had expected earnings of 49 cents per share, according to Reuters Estimates.

Sales rose 34 percent to $1.79 billion, ahead of an average Wall Street estimate of $1.63 billion. Revenue from South America was up by 44 percent.

Agco said spending on strategic initiatives would limit improvements in operating margins this year.

The company also said it was targeting 2008 earnings of $3 to $3.15 per share on sales growth of 20 percent to 22 percent. Last quarter, Agco said it expected to report a full-year 2008 profit of $2.75 a share -- though it said it had a "goal" of hitting $3 a share.

(Additional reporting by Nick Zieminski, editing by Dave Zimmerman)