Good morning. T o those of you joining us for our webcast and for those of you here at the Fendt production facility in Marktoberdorf, Germany. My name is Greg Peterson. I head up Investor Relations for AGCO. It's my pleasure to welcome you to AGCO's sixth annual technology event. We're thrilled to have you with us as we showcase the innovations that are shaping the future of agriculture. These two days are all about transformation, how AGCO is leveraging technology to empower farmers, drive sustainability, and unlock levels of productivity across the globe. Our focus will be on innovation, technology, and our plans to grow the PTx business. We're hosting this event in Germany, the home of our high-tech Fendt brand, for two reasons. The first is to showcase Fendt's AGCO's high-margin growth initiative as we globalize the full line of our Fendt brand.
The second is to highlight the attractive demographics of the European market. With that, let me handle a safe harbor information. We will make forward-looking statements this morning, including statements about our strategic plans and initiatives, as well as our financial impacts. We'll discuss demand and product development and capital expenditure plans and timing of those plans and expectations concerning the cost and benefits of those plans and timing of those benefits. We'll also cover future revenue, crop production, farm income, operating expenses, tax rates, and other financial metrics. All of these are subject to risks that could cause actual results to differ materially from those suggested by the statements. Further information concerning these and other risks is included in AGCO's filings with the Securities and Exchange Commission.
The SEC report that we file, including AGCO's Form 10-K for the year ended December 31st, 2024, and subsequent Form 10-Q filings include the risks that we are facing. AGCO disclaims any obligations to update any forward-looking statements except as required by law. We'll make a copy of this webcast available on our website. This morning, we'll start out with an overview of our Fendt operations and the European demographics of the European market that make it very attractive. Christoph Gröblinghoff, who runs our European Fendt business, will start off in that first section. Following Christoph, Eric Hansotia will give us a brief overview of AGCO's strategic initiatives. Then Andrew Sunderman, who's our General Manager of our PTx Trimble joint venture, will have a deep dive on our PTx business. At the end of our presentation, we'll have about a 15-minute.
Legacy do you want to leave behind? A legacy is the footprint of a lifetime, full of experience, knowledge, and history. Our Fendt story began in 1930 with Johann Georg Fendt and the aim of simplifying the farmer's life. This is still the case today. To this day, our engineers have a deep understanding of agriculture, but at the same time, a technological view from the outside. On the requirements of our customers, we continue to develop agricultural technology to simplify the farmer's work. We work on machines and digital solutions that are both sustainable and economical. Connected, flexible, efficient.
We work on technology that enables our customers to reduce their costs by using sustainable technology.
By listening to you and understanding your challenges, we develop technologies to increase your productivity today and for future generations. Because when we look around us, autonomy is part of our everyday lives. Autonomy allows you to decide for yourself which path you want to take. What do you want your legacy to be?
Good morning and welcome at Fendt. Here to the AGCO Tech Days. Good morning, Eric. My name is, as Greg has said, Christoph Gröblinghoff. I'm Vice President and Managing Director of Fendt. I'm doing this with my three colleagues, who I just want to introduce. This is Ingrid Busjäger-Martin, Dr. Josef Meyer, you have just seen him in the film, and Eckhard Gleiser. We are running Fendt. Thank you for being here also. What I now want to see here on the next three slides is to have an overview about what is AGCO in Europe markets, an overview about what Fendt is doing, and maybe some cool experience, what we are doing on Fendt customer experience. Let's move on to the first one. Europe is really a mature and innovative driven market with strong demand for sustainable and precision technologies. The last three years, Europe has guided track systems.
Farm consolidation, especially here in Europe, is creating a growing need for precision tech and Fendt technology. Our market is less cyclical than all other markets. We have really a focus on sustainability, which will drive investment in precision technology and Fendt. For smaller farm size and diverse activities of the farmers, and the farm, what Greg mentioned, you will see tomorrow is an example of that, where they not only produce farm crops, they are also active in renewable energy with a solar panel and biogas. AGCO has really a strong foothold in the region. Last year, Europe was contributing 58% of our $11.7 billion revenue and is making our largest and most resilient market. Let's have a deeper look inside. The competitiveness advantage in all regions is the following. AGCO is the market leader with a growing lead. This is doing with Fendt, with Massey Ferguson and Valtra.
We have the strongest dealer network with 755 independent and strong viable business partners. We have the widest coverage of OEMs in Europe through PTx. Why that competitiveness advantage will continue and grow in the future, this is clearly leading to the huge investment, what AGCO has really done in the last 5- 10 years. The big investment in the CVT production here and the extended capacity in Marktoberdorf, the strong footprint of our parts depot in Ennery, Hohenmölsen, where we're producing a lot of cool products. Beauvais 4 now, the new Massey Ferguson Experience Center, and also our investment into Linnévarie, the heart of our AGCO engine, is representing this. As you can see from the graph, Europe, Middle East, has the narrowest range of year-over-year change in the tractor sales above 80 horsepower, just only 28 percentage points.
Now, I have a brief overview about what Fendt is. First, Fendt products are available in all markets, really for professional farmers and contractors. We are producing these machines, and the factories are belonging to the Fendt brand in total in 11 sites. Let me begin from the west to the east and see first the three sites in the U.S. It's South America. It's Ibirubá, where we're producing the Momentum for the South American market, and Santa Rosa for our IDEAL.
Moving to the right, six factories in Europe, beginning in the South, it's Italy, where we're producing our IDEAL combine and the Strawhawker, followed then by Asbach-Bäumenheim, close to this site here, where we're producing cabs and hoods, Feucht, the production site for tedders, rakes, and mowers, Hohenmölsen, the assembly line for our Katana, self-propelled forage harvester, the Rogator 600, and also producing for components, Wolfenbüttel for the round baler, and last but not least, the heart of Fendt, it's Marktoberdorf, where Eckhard is producing all these wonderful Fendt worldwide wheel tractors. On the next slide, we see what I mentioned before. Everything was founded in 1930, so you can remember what will happen in 2030. We are distributing all these wonderful products through 480 distributors worldwide, and of them are 220 in Europe. We're doing this with more than 10,000 employees.
6,500 roughly are here in Europe and 4,800 here in Marktoberdorf. Come to some examples of Fendt experience, what is really different for Fendt. Please begin with this topic. This year is Agritechnica. Every two years, the biggest and really leading trade fair agriculture show is happening in Hannover. This year, we're also introducing five new product lines. It's beginning with a 300 series, followed with a completely brand new 500 series, which we also will see, an update on the 700 series, the completely new 800 series where really farmers are waiting on, and an update on the 1,000 series. How we are doing this, I want to highlight here. For sure, we are doing this with press camps. We are inviting journalists on the field and having showed this, but Fendt has done this year completely new with Creator Days.
We have invited 10- 24 creators or influencers, all coming to be in the field, close to Berlin, and also having the experience to drive and to test our machines. The coolest one was really after only two weeks, we had more than 19 million views or 1.4 million engagements, so it means comments, share links. We have streamed this on Instagram, TikTok, YouTube, whatever you want. For us, influencers, I would say not new, but we are playing the, a v ery successful, and they are the multipliers who directly spread out our new. To buy it. That's really important for us to do this.
The coolest statement from the influencer was, "In the field, do you have enough streaming capacity?" We say, "Yes, for sure." We put a Starlink pole into the earth, and all these influencers are testing everything and streaming out of the machine into the worldwide net. Another cool example I want to share here, maybe it's also been new for you, Fendt Holiday Weeks. What is this? In the summertime, we are closing. We have. Saying that the machine, that then for the other 48 weeks, the factories. We are taking the opportunity and open this big forum here for young and a huge turnover wherever. The point is why we are doing this, and this is really unique in our industry, is kids are the next generation of farmers, and this is our customers. You cannot really imagine what it really means for us to do this.
The last one I want to share here is we are now this year celebrating 30 years of anniversary of our transmission, our Vario transmission. We are doing this also beyond Agritechnica this year. Everything has started exactly for 30 years on Agritechnica, 1994, 1995, sorry, where we Fendt presented the tractor with a continuously variable. Fantastic.
Okay, thank you very much.
Thank you, Christoph, and the whole Fendt leadership team. It's so clear why leaders drive Fendt. You just can start feeling the Fendt experience, and you'll be able to experience a lot more of that during the day as we tour the factory and get on some of the product. I'm going to hover up a little bit now and talk about the overall strategy of the company and some really big, important milestones that we've crossed over the last few months. There's a diagram here that shows how all five things are coming together at the same time. The heart of it is our PTx business, our Precision Ag Leadership business.
Now, when our leadership team came together, when we took over the leadership of the organization, we said, you know what, we want to set a vision for the company to be the trusted partner for industry-leading smart farming solutions. Essentially, that means we want to do a better job than anybody else for our farmers at having intelligent machines that can do difficult things for themselves. That started with an acquisition of Precision Planting. We made six other acquisitions of small tech companies, doubled our engineering budget, but it really came home when we were able to acquire the Ag assets of Trimble and bring that in and form the collection of all of that, which is now what we call PTx, Precision Technologies Multiplied. Bringing those pieces together has created a $900 million starting platform, but that's not where we're headed.
We're headed for a $2 billion outcome when we really start having the synergies and value come together from all of this. We're going to expand on that a lot today, but that's the first major pillar and the primary focus of the company. When we made this PTx acquisition about a year and a half ago, it allowed us to make a second portfolio change, and that is to exit our lowest growth, lowest margin business. We called it Grain and Protein Solutions. We brought in a high-tech business, high margin, high growth, high value to customers, and exited one that was a bit of a distraction for us. It wasn't so synergistic with our products, with our channel, those kinds of things. We said we're going to be totally focused on Precision Ag.
The third portfolio shift was that we were able to resolve all of the challenges we've had with the Toffee organization. We changed the supplier relationship and got a much more flexible supplier relationship for our farmers, but also changed the shareholder relationship. We now have the opportunity to do share buybacks. First time under my leadership that we're able to do that. Now we know the investors that all of you represent have said that's something that's important to you. With this change, we've announced a $1 billion share buyback to show you the strength we're placing behind this shift in our portfolio. Those are the three things that changed what is AGCO. Inside of that, there's two other changes. One is something we call Project Reimagine.
It's something we started about two years ago, and it was the notion of saying, you know, with some of these new modern tools, let's rewire how we do all the work inside the company. We've automated a lot of our work, outsourced some of it, and offshored other bits. When you put all that together, there's been 700 projects. Every one of those projects not only makes us more efficient at a lower cost, but makes the outcome better. Something gets better for our dealers, better for our farmers, or better for our employees. They have new features, longer coverage, something like that. When you add all those up, it's essentially a $200 million reduction in our cost base off of about a $1 billion start. Fundamental rewiring of the company, and that's been really important under these uncertain times with tariffs and everything else.
Finally, the other big strategic element that comes together is FarmerCore. FarmerCore is a whole redesign of the distribution strategy. For 100 years, we've had the farmer come to the business, come to a brick-and-mortar business. All of our competitors have done the same. We said, wait a minute, that's not how the farmer wants to interact. The farmer wants the business to come to them. That's what we did. We invested in digital tools, working with our dealers so that they can invest in service trucks instead of brick-and-mortar, and have all the work done on the farm. We service not only our products, but all of the products on the farm, servicing the farmer, not the product. Those are the five big strategic shifts that we were working on a number of years, and they're all coming together now to form the company that we've wanted.
Today, you know, I talked about our vision. Today, we're going to have that come to life. Today and tomorrow, we're going to have that come to life for you. We're going to have you understand, you know, we aim to be the most farmer-focused company in the industry. In order to do that, we often talk to farmers about what their pain points are. That's what we're going to start off with you folks. We want you to be able to understand the pain points in farming, because since we don't do this every day, we want to make sure that that's our foundation. Those are challenging things that the farmer has to do that are either complicated or very difficult to do manually that a machine can do better.
We want to show you how, by putting a technology solution to that issue, not only are we helping the farmer and making them more productive, but we're helping AGCO, because the value we generate for the farm turns into value generated for the company. Higher margin, more sales, more stickiness. We'll show you impact on pain points, solution, benefit to the farmer, and benefit to AGCO. We feel like we've really now, with the PTx investments that we've made, we are of a mindset that is unlike anything else in the marketplace. On the one hand, we are dedicated now, we have dedicated teams to solutions all the way around the cropping cycle, broader than anybody else in the industry. We start pre-planting with water solutions, automated soil sampling, and data analytics. We're the leader in planting. We know planting better than anybody else on the planet.
It goes into fertilizing and crop care during managing the crop during its growing cycle and then harvesting. At the center of this is our new Farm Engage data platform that takes data from the machines and from the farm all the way around that cropping cycle to help the farmer analyze and optimize their farm. The big thing that's different about Farm Engage is it does this for all brands. It ingests data from any brand of equipment, helps the farmer analyze that, and then deploys data to any brand of equipment. We're unique in that regard. The bringing on of the Trimble group is what makes us the largest, most powerful, most successful mixed-fleet Precision Ag business and team on the planet. There are a couple of elements that we've kind of put together to make sure that we're differentiating our approach on solving farmer problems.
The first one is we're designing for autonomy first. This set of teams that's been working all around the cropping cycle, for those of you who've been around AGCO for a while, you've heard me talk about the fact that we're automating one feature after another. We've listed all of these pain points, and we've got over 300 of them that we're trying to automate for the farmer. Put that in autopilot mode and let the machine handle it itself. As you automate a number of features, you can group them together and automate a full task. Once that's available, you can let the machine handle that task on its own without an operator involved. We're working in that mindset of automating features on the path to autonomy so that we're thinking autonomy first. At the center is this mixed-fleet data platform because these machines are generating data.
We want to be able to have a great platform for the operator to interface with and the farmer to interface with. The other unique thing is our retrofit channel. This is something that only AGCO is investing in. We have our machinery channel for these fantastic Fendt and Valtra and Massey Ferguson machines. Separate from that, and unique to us, is an entirely separate set of dealers that all they focus on is the retrofit solution for the mixed fleet, for putting new technology on any brand of equipment that's out there. They don't sell combines or planters or tractors. They only sell technology. They're a group of individuals that understand agronomy, farmers' pain points, and how technology can solve those things. It's a different makeup of background. It's a different makeup of channel to solve a different type of farmer problem.
We're the only ones in the market that have that. Those are our differentiating secret sauce elements. We've been talking a lot about our growth drivers. AGCO is clearly focused on growing our business, adding more value in the marketplace. We've been talking about three primary areas. Now, Christoph got you fired up about the Fendt experience. That's why we're starting here today. Fendt has historically been a European tractor business, I f we think way back. T he group of us said, let's change that and let's make it not a European tractor business, but a leader in the global full line of equipment. Two dimensions changed. On the first hand, innovation happened all the way around the cropping cycle to deliver a full set of solutions that Christoph talked about.
Secondly, we've invested in the distribution channel, especially in North America and South America, to be able to have the best of the best experience, best of the best product, and best of the best dealer experience wherever we want to make sure that the most demanding farmers, no matter where you are in the world, get the very best Fendt experience. We've grown significantly. You see our track record over the past years, and we're on pace to achieve our target of $1.7 billion by 2029. The second one we're going to talk about a lot today is Precision Ag. I talked about our history. We've grown steadily, and we're well on track to delivering our $2.2 billion, $2.0 billion target by 2029. The third one that we're going to talk about today is parts and service. Now, parts, we're already the leader in what we call parts fill.
When the customer comes to the counter and asks for a part, is it there? If the answer is yes, then we get a yes on parts fill. If the answer is no, we know. We lead, and it's not our data, it's Carlyle data. It's an independent third-party organization that measures us versus all our competitors. Year after year after year, we are absolutely the leader in parts fill. We want to continue to grow on that. That was our foundation. On top of that foundation is a shift from reactive, hey, something happened, now I need a part, to proactive. We're going to anticipate when the customer needs a part, either for maintenance or for repair.
The shift from reactive to proactive, along with continued data analytics, having our analytics engines be able to anticipate what our dealers need to stock and what farmers will need to purchase, has us very confident in this growth up to $2.3 billion. Kind of keeping the messaging the same, the strategy is right down the middle of where we've been talking about year over year in terms of our growth drivers. Let's talk a little bit more about our Fendt business. We've been, the innovation team at Fendt has been spinning very, very fast. I talked about the need to grow our portfolio from a fantastic best of the best tractor product line to the best of the best full product line.
They've been doing this over the last few years, so much so that a little over half of our innovations have been for the North and South America market. Twenty-three launches, twelve of them for North and South America. I want to talk a little bit then about the circles on the right side of the chart here. You can see the three regions from top to bottom and then how much the product covers that region on the left and how much the dealer covers the open territory on the right. Let's start at our bottom. This is our most mature market. We've got the full market covered with dealer coverage, 99%. We cover 84% of the products that the farmers want. There's a few things like planters and tillage equipment that we don't provide. We think the market's well covered there, but we provide everything else.
That's the framework. Now, as we move up in South America, we've got 80% of the market covered in terms of territory, but 96% of what the products needed by our farmers. Finally, in North America, 81% of the market covered in terms of geography and 79% of the products covered. The point being here is we've gone from nearly zero a few years ago in terms of product and market coverage to nearly full coverage of product and market. In fact, the product portfolio we have is the product portfolio that we intend to have. We're very happy with the product coverage. We're going to continue to evolve in an iterative way now on market coverage. Our big focus is not so much filling in those last few points of open territory. It's about penetrating successfully the territory we already have.
You can see visually here a picture of the significant amount of investment and delivery of products all the way around the cropping cycle over these past several years. It's been a constant flow. Christoph talked about the number of launches we're going to have at Agritechnica. That's just what happens from the Fendt team. Every year, lots of product coming out to satisfy new solutions. You don't want to just hear this from me. I think it's much more powerful to hear it from one of our customers. I've got a couple of them that volunteered to talk to you today. I'll tee that up.
We are here on the island of, with our two electric tractors, one is the E107V and the other is the E107 standard tractor with a front loader. We want to do a demonstration here both in the agricultural and municipal sectors. We want to carry out all the typical island tasks and show what the tractor can do.
It's just really great to drive. You have to say that clearly. It handles like a board on the beach. To the fact that the power goes straight to the wheels, that really is an awesome driving experience.
One aspect, of course, is always the noise level. A vehicle like this is relatively quiet. I think our tourists notice that as well. That also always gives us a marketing effect.
Borkum is the westernmost of the seven East Frisian islands located in the northwest of Germany. What truly makes this place special and unique is that both tourism and daily life here are thoughtfully designed to be exceptionally sustainable and environmentally friendly. We set this in motion as part of an island strategy already 10 years ago.
The trend on the island of Borkum is clearly moving towards electric drives, and the two E100 models would fit well into an integrated infrastructure charging network. In addition to the typical municipal tasks, there are, of course, other duties on an island for the.
And a second customer.
My name is Thomas Leoman, and I run a beef cattle operation in Tressviken, Swedish, Ostrobothnia, on Finland's west coast. We grow grass and whole crop silage on just over 300 hectares of agricultural land. We acquired our very first Fendt at the end of 2012, a 722 model, and it is still actively working on the farm. Since then, we've acquired several more, so today we have eight in total: the 500 Series, 600 Series, 700 Series, and 800 Series.
Affordability is a challenge for farmers in general, and also the large amount of work required to run a big farm today. That's where Fendt really comes in as a helpful tool. Fendt makes everyday tasks easier with its versatility, driving comfort, and it helps you get through longer days, do a better job. Over the 13 years, we've driven more than 25,000 hours with Fendt. There have been very few operational disruptions or work stoppages. The service costs have remained at a low level. What I like most about Fendt is their quality, reliability, and comfort. Fendt is an innovative tractor brand that time and again manages to make something that's already good even better. That indicates a great passion in their work. I had the privilege of participating in Fendt's test campaign for the new 600 Series in September 2023.
There, we got to thoroughly try out the brand new tractor before its official launch and comprehensively test drive it under real world conditions. We meticulously tested its agility and overall efficiency in both transport operations and demanding fieldwork scenarios. In a collection of tasks, the tractor really impressed me a lot. Already at that stage, I thought this is something for me. At the following Agritechnica affair, we moved forward a bit with the deal. Here we are today. The 620 was delivered to the farm in December 2024. The tractor fully and completely lives up to my high expectations. The impressive 620 truly impresses in that it did the same amount of work as a larger six-cylinder tractor, with lower fuel consumption and better maneuverability. The separate drive on the front and rear axle with pulling power, and the tractor consequently becomes much more agile.
So far, compared to our old tractor in tests, it makes round bales and uses three liters less per hour. They're all my favorites. Each one is good at its job, but the 620 has the potential to become a favorite.
There you go. We had talked about three growth drivers. That covers our Fendt growth driver. We're going to cover two more now: Precision Agriculture and service parts. With that, I'm going to invite Andrew up here to talk about our growth in PTx.
Nope, I'm going to do service parts. Sorry. Service parts, let's talk about service parts. You know, we've been at about 15% of our targets to get to about 20% of sales. We're on track to do that this year. You say, what's going to drive that? I've mentioned a couple of areas. Having the right part at the right time, that's parts fill.
We've been demonstrating that over the last several years, but we've been building on it with some of our AI tools. We look at the installed fleet of machines out in the marketplace, and we say, what should a dealer stock to make sure that they've got just the optimal set of parts to make sure that they can serve the customer? We use machine learning models to be able to do really good recommendations to our dealers. It's called dealer-managed inventory. More and more of our dealers sign up for that. We've got almost all of them on that now. What they tell us is their parts stock actually goes down, but their parts sales go up. They're not investing in the wrong parts. They're investing in the right parts, and they're making sure that they've got what they need.
We've also been significantly investing in just the infrastructure of our parts business. I visited our parts business here a few months ago, and we're building a huge, just did groundbreaking on a huge new parts warehouse in Ennery, France. That's going to be the hub to serve not only predominantly the European market, but also a hub that supports our other markets as well. Also, a lot of other automation and infrastructure in terms of a $12 million investment there. We've been investing in Reman in Europe and in South America. Reman is essentially taking a component that's been used, taking it back to a facility, refurbishing it, and then being able to sell it to a farmer at a reduced price. It's fully upgraded to capabilities, but it's at a lower price point.
As farmers are putting more and more hours on their machines, Reman is a bigger and bigger solution for them, especially in the higher locations of South America. Finally, this is more on-farm capabilities. As we're remotely monitoring the machine, we want to be able to anticipate, hey, we see you coming up on a service interval for maintenance. Why don't we help you order all the parts? We see through proactive alerts, we can see when there's error codes coming off the machine and say, we think that there's a component that's going to fail. Why don't we replace it before the failure? Those kind of proactive solutions are what's really helping our dealers grow their business, but our farmers stay in the field more consistently. Now I've covered two of the three. We're going to turn it over to Andrew to cover the third on Precision Ag.
Very good. Good morning and good to be with everybody. If you're like me, there's no more exciting place than to be here in Marktoberdorf, Germany, to see the heart of the Fendt brand. I'm excited for you to experience the products and see the factory later today. As Eric mentioned, my name is Andrew Sunderman, and over the last 18 months, I've had the privilege of sharing our PTx strategy with you and providing you updates as we've progressed on this journey. This morning, I hope to do the same thing. As I get going, I think it's important that we take a step back and really understand why we have the strategy that we have. This is a unique strategy that we have at AGCO and for PTx.
It's important to understand how these growth drivers allow us to really deliver on what we've committed to in these strong growth aspirations. PTx is centered around the customer, and I want to start right there with the farmer. If we look at the bottom of the right hand of this slide, you'll see the three things that really make our retrofit-first strategy a key enabler for our growers. We focus on raising farmer profitability by solving some of their most challenging problems and doing so in a way that provides a fast return on their investment. We focus on driving sustainability, doing more with the resources and inputs that they have, driving higher yields, providing that return that our customers know is needed for a more profitable operation.
We really focus on how our farmers can continue to build off of the products one after the other, that we allow them to incrementalize their investments, building the strongest Precision Ag and equipment portfolio for their operation, again improving the efficiency and profitability better than any company out there. It's not just about what we deliver for our customers. It also presents new opportunities for us as AGCO and for our dealers. We're able to increase our addressable market through our retrofit-first approach, solving needs for both new equipment as well as the existing pieces of machinery that farmers have in their operations today. We're enabled to enhance our speed to market, delivering these solutions in a faster way that allows us to grow and demonstrate the abilities of these technologies year after year, becoming more mature and more advanced in our reliability of our product offering.
It also allows us to accelerate our overall precision adoption as we can get the products into the hands of farmers faster and allow them to improve their operations in a more meaningful way. We've talked about a couple of times how PTx is really serving as the backbone of AGCO's technology offering. This isn't just through our retrofit offering of our PTx Trimble, and Precision Planting products. These also serve as the backbone of the technology offerings for our Fendt, Massey Ferguson, and Valtra brands, as well as over 100 OEM customers, some of which will be with us here on Thursday to experience many of the same technology products that you'll see in the field tomorrow. Speaking about distribution, let's talk about this channel transformation that we've been undergoing for the past 18 months.
Our PTx distribution strategy is built around the industry's only dedicated Precision Ag dealer network. Think about that. A group of dedicated dealers that are experts in the field of Precision Agriculture, connecting with the needs of farmers, connecting with the needs of farmers to the technology solutions available from PTx. This is a unique part that really will enable the growth of PTx. We do this through two strong types of dealers. First is our PTx Elite dealer network, our dedicated Precision Ag dealers that are unmatched when it comes to matching the needs of customers' problems with the technologies that we offer and supporting precision Ag technologies to keep farmers up and running in their most desperate times.
These Elite dealers have grown significantly since the start of PTx, and we still have a long way to go this year, as in 2025, we'll double our coverage of our PTx Elite dealers this year. Our PTx Elite dealers are complemented by a broad number of base technology dealers. Our base technology dealers are oftentimes equipment dealers that utilize technology to enhance their existing machines or improve the capabilities of the machines that they deliver to new customers. Our base technology dealers are oftentimes made up of Fendt, Massey Ferguson, and Valtra dealers, as well as other OEM dealers, specifically those that carry Case and New Holland equipment. This year alone, we've added more than 250 Fendt, Massey Ferguson, and Valtra dealers as PTx base dealers, improving our coverage and the availability of PTx products to dealers around the world.
As we've talked about, our strategy isn't just about serving customers through our dealer network, but also for those customers that look to purchase PTx technology on a new piece of machinery. We are the proud provider of technology to more than 100 OEM customers around the world and throughout the crop cycle. These OEMs look to PTx as their source for Precision Ag Technologies to bring new enhancements and new capabilities to machinery from guidance and steering systems on tractors to planting solutions, seeding solutions, as well as harvesting solutions. These two key levers from our distribution strategy really allow us to grow our market expansion and globalize this product portfolio that we've come to develop over many years. Speaking of product development, we've had a very fast-paced year all around innovation.
When we set out on this journey, we were bringing to market on average two to three new products to the market in any given year. We then said, we think we could be faster, we think we can be better, and we think we could deliver more value to customers. We set our targets on five new products to market in one year. This year, I'm excited to announce that we will deliver 11 new products to market from our PTx Trimble, and Precision Planting brands that all provide clear return on investment and clear profitability improvements for our customers. Some of the products that I'd like to highlight are rooted in our Radicle Agronomics platform, transforming the way of nutrient management, bringing better data and insights into a decades-old process.
Our OutRun Autonomy product that you'll be able to see in the field tomorrow is revolutionizing the agriculture industry by allowing tasks to be completed in a fully autonomous manner. As Eric talked about, Farm Engage is connecting the mixed fleets, allowing our farmers to plan, monitor, and analyze all aspects of their farming operation through one digital platform that I'll talk about more later. Our Symphony product is a completely new line of liquid application tools for sprayers around the world. These four product categories completely transform the PTx business and provide new platforms for us to develop on top of not just today, but for many years into the future. These products provide more than just a benefit to our farmers. They also enable us to have new revenue streams for us as a business.
Things such as recurring revenue models that we have implemented with our correction services, our OutRun Autonomy products, Farm Engage, Panorama, and Radicle allow us to serve farmers in new ways that allow us to fit their buying preferences today and well into the future. As I talked about, one of our key products that we've launched this year is our Farm Engage data platform. Now, this is a product that we've talked to you about many times before, and it's something that we have been executing on our strategy on since late in 2024. For those of you that were able to join us at this year's Farm Progress Show, this product was launched to the global markets at the North America Farm Progress Show and really delivered on the first phase of our strategy.
This first phase was all about connecting our platforms and connecting machines through one dedicated Precision Ag tool. We're able to provide common login, common user interface, and really provide a way of enabling farmers to get their data into the hands of their trusted advisors through our Connectivity Center product offering. As we look forward to this year, we'll be adding a completely new set of capabilities to our Farm Engage product portfolio as we consolidate features from across both the task data management, the agronomic data management, and now the machine data management all into one consolidated platform that we call Farm Engage.
As we look to the future in our phase three, we'll bring this all together under a new unified look and feel that makes sure that farmers have all of the data at the tips of their fingers to better utilize this in their planning, monitoring, and analyzing of their farming operations. This is something that, as we've launched this to farmers, farmers have certainly seen the benefit of our differentiated approach that focuses on connecting any brand of machine in the farming operation, not just the brand of machinery that they purchase from their dealer. We've talked about our channel strategy. We've talked about our product offering. I want to talk a little bit about the markets that we're serving.
As we look at our Precision Ag uptake and adoption across these various markets, not only do our channel strategy and our product offering give us the confidence to deliver on our growth aspirations, but so do the markets that we serve. As you look across the graph on the side of the slide here, you'll see there's a varying range of adoption of Precision Ag products across the varying regions. Europe and North America represent fairly mature markets for core Precision Ag products such as guidance and steering systems. We have great opportunities in terms of how we control implements for the better use of the inputs and the outcomes from a yield standpoint that we look to offer. In Europe, specifically around our better control of chemical application and seeds, presents us a great opportunity with our Precision Planting product portfolio.
North America is oftentimes the tip of the spear for PTx in introducing new product innovations as we look across our nutrient management portfolio and our autonomy offering with OutRun. Also connected with our Fendt product portfolio, we now have the pairing of the most innovative tractor brand in the world together with the world's most innovative technology brand in the world. As we move to South America, we really have a great frontier of growing our PTx business and our Fendt, Massey Ferguson, and Valtra brands. Together, these technology offerings paired with a strong machinery product offering allow us to engage with farmers in new ways, building off of the more localized expertise with our local manufacturing, paired with technology that is designed specifically for the needs of South American markets, focusing on soybeans, sugarcane, and many other local crops.
What's really driving, especially for our North American and South American markets, is not just the product offering, but also the way in which we bring these technology solutions to market with our FarmerCore initiative that Eric Hansotia talked about a little bit earlier. Our FarmerCore initiative allows us to meet farmers where they are in their farming operation, bringing our technology solutions and machinery solutions directly to their farm for more localized on-farm support. These growth drivers will really allow PTx and AGCO Corporation to deliver on the growth aspirations and improve these technology adoptions, especially in the markets that are underserved today.
Now, we've talked a lot about many of our products, and we've shown you OutRun many times before, but I want to just highlight one video here with our OutRun product and how we're bringing autonomous capabilities to really transform agriculture in a way that is not only more accurate, but allows farmers to better utilize the labor and the resource pool that they have accessible in their market. Let's watch a quick video.
As a farmer, we always get the product, the finished product when it comes to market. What they're developing is certainly going to change agriculture, probably in the same way Autosteer did 20 some years ago.
We are solving fundamentally important problems for humanity and feeding the world.
I think that's really the key piece of the OutRun introduction to the market. The big idea here is that retrofit-first approach where we can take your existing machines, make it autonomous, and iterate very quickly while we learn what autonomy really means and how it fits into producers' operations.
I think OutRun, the role it plays in the future of agriculture, is it's the next step in the technology that is available to farmers. It will help with some of the issues that farmers are seeing nowadays with labor shortages. I think it's really the next step in their technology that they can use.
I'm excited about the future of agriculture with products such as OutRun, and I hope that you'll see tomorrow and in many of our other events just what autonomy can mean for the future of agriculture. With that, I'm going to go ahead and hand it back to Eric to talk about how AI is transforming AGCO and agriculture.
Very good. Great job, Andrew. You can see with all of the things going on and the track record we've already developed in PTx, we're very confident in the future of our differentiated approach delivering fantastic results for farmers and our investors. With AI being such an important tool, we also wanted to just touch real quickly on the fact of where we're applying AI. It shows up in our product, it shows up in our business, and it also shows up directly with our customers. With our business, we have got this thing called AI Farmer. It essentially ingests all of the data from either industry sources or whenever we go visit a farmer and puts that into a data library.
You can use essentially a large language model targeted right at that data set for engineers and other people to query that data and ask the data set about what features farmers would prefer and how they want to interface with machines, where they're going with their business. It's a great way to collect a lot of complicated information. Development or software fast and allow them to spend more time on innovation. Get the base software from AI and then develop the innovation part on top of that. In terms of our products, you know, Andrew talked about a couple of them, the Precision Planting SymphonyVision.
That's the camera system that looks down at the crop, looks at 75 images and processes them per minute and identifies the difference between the weed or the plant and then directs the command to the nozzle to spray only the weed, saving about 70% of the chemical. Our grain quality camera in our combine is constantly looking at those images, helping the combine self-adjust to make sure it's doing a perfect job of a clean grain sample with little damage. Similar to some other industries, we're also using AI in our customer support. You think about all these machines that Christoph showed over all this time, all this time horizon, and someone calls in and says, "I've got this model of machine with this certain issue," and the customer support person used to need to look, find the manual, and the diagnostic, then the repair, then the parts.
Now AI can just serve that up to the support person and speed that issue up, but also start handling a lot of these issues automatically. AI is essentially working its way through the entire company. We want to be a frontier firm in terms of the use of AI. I've already covered that. Talk a little bit about the technology stations on the farm. You're going to see real-time machines that are doing everything that we talked about here today, all the way around the cropping cycle. There's going to be five stations for you to really witness firsthand. There's going to be a plan and prep station where you're going to see autonomous tillage and then also another set of autonomous fertilizer application where there's nobody in the tractor.
The tractor gets driven to the field, and then it figures out its optimal path and does the job without anybody in it. The second station will be about the most automated planter on the planet, and that's Precision Planting. We just know planting better than anybody else. You'll see all of the automated features in terms of depth and seed spacing and hybrid and fertilizer treatment and all of the things that the planter can do all on its own to make sure it's doing a perfect job in every spot on the field. The third one's going to be about crop detection. This is one I talked about. Vision systems that can identify the weed and save 70% of the chemical. Finally, is the harvesting solution where you'll see the autonomous grain cart in operation.
At the center of this is going to be a station fully dedicated to Farm Engage. We'll talk about Farm Engage just outside the room. You'll see it in action in the field, being able to design a task, send it to the machine, have the machine operate according to that task, and then send the as applied back to the farm data management system. We'll be able to see a lot of this. Each station will be able to see the impact to the farm, what challenging issues were solved, and what the impact was to the farmer. You add these all up, and it's essentially a 17% gain in productivity or profitability for the farmer. It builds, you'll see every bit of our tech stack in action: autonomy, automation, logistics, connectivity, guidance, and sensing, all in real life.
With that, we've presented kind of the coverage of our three growth platforms, a deep dive on each one of them. We'd like to open up for any questions that you may have of us.
Since we're webcasting, please wait for the microphone to get to you so the folks listening can hear the question. Over there, Chad.
Thank you. Good, this is working. One of your slides, I'm sure you saw this coming, but one of your slides you talked about recurring revenue and various types of subscriptions and so forth. I'm curious if you've evolved your thinking about how big an opportunity that can be for AGCO, and maybe you can add where you're starting from now.
Yeah. Inherently, farmers in general have historically not liked subscriptions because they want to buy a machine when they have profitability and not buy a machine when they don't. They're willing to do subscriptions and things that are evolving over time where they can see the item gets better each year through over-the-air software upgrades. Farm Engage is like that. Our soil sampling data is like that. Our autonomy kits are like that. As you saw several of these solutions coming to market that behave that way for the farmer, we think that a subscription model is probably going to be one that they're going to prefer. That's growing in its importance. Those are all still kind of at the bottom of the S curve, but we think it's going to be a meaningful portion of our business.
Several points of our overall business, but we haven't set a target exactly yet in terms of what it'll be. We think it's growing. Okay.
In one of your slides, you highlight mixed-fleet data connectivity and the ability to gather data from some of your competitors. I think it was the last point in terms of those developments. Can you just talk about potential resistance from that kind of connectivity and what you're doing to counter that resistance?
Yeah, we've got full access to the data availability of our main competitor machines. We don't see any resistance showing up there yet. It's a big thirst from our customers because most of our customers have a mixed set of equipment on the farm, either multiple brands or multiple ages of equipment. This allows us to connect their entire fleet of equipment. Some data platforms will ingest more than one brand, but essentially none of them send data back out to more than one brand. This is the only two-directional mixed-fleet data platform in the market. Our farmers are very, very excited about this. We think it's a big differentiator for us and a big help for our farmers. Kristen.
I wanted to ask a little bit about the Farm Engage platform and sort of what your goal for that is. Is that just table stakes? We see that this exists in the market and so we have to have a solution. Is there something else in terms of engagement or sort of getting deeper into the brands that that platform serves for you guys?
I would say it's becoming a larger and larger value statement in terms of the buying behavior of our customers. They've loved our machines, but they say, but how good is your data platform? Those two things have to go together. The importance of the data platform has been going up and up and up as these machines generate more and more data and the farms become larger and larger. We knew we had to be a leader to be, if we're going to be a leader in Precision Ag and smart machines, we had to be a leader in data platform. Of course, we're going to make it a mixed-fleet data platform because that's our strategy for all of our Precision Ag business. It puts grease in the gears of our existing business, but we're also confident that it's going to open up new doors.
We're going to sell this as its own subscription model to those farmers that don't have any of our equipment yet today. It'll open up doors to other farmers that we haven't served yet. We think that the value we're going to generate with this mixed-fleet data platform will be an entry point for us to be able to engage with new farmers that then opens the door to other solutions.
The penetration slide you showed, technology penetration, how much of that is the result of farm size versus resistance? What's driving and also meaning availability of products to serve the unique needs of the farmers in those individual regions?
Yeah, so I think that was the one, you're referring to the one that Andrew covered, a different penetration by region. It's a little bit of a mix. The farm size certainly helps because as you buy a module that costs $25,000, let's say, the larger the farm you have, the more acres you're able to, you get a faster ROI. Farm size consolidation, and consolidation is happening in every region. That helps. There's just also how hungry is the farmer for improvement? Especially those areas where there hasn't been a lot, there are two drivers of that. Either regulation forces it or lack of subsidies requires it. In those markets where there's not as much subsidies, the farmers are exposed to the raw market, and they just have to get more productive to be able to stay viable.
In some of the more highly regulated markets, the regulations are pushing farmers to say, you have to do farming with less inputs. They have to figure out, okay, I got to use technology to be able to still get good outcomes with less input. Those are the two main drivers: regulation and necessity because of less subsidies.
Just following on from that question, in terms of the 17%, you said 17% increase in farm profitability as a result of these measures. Is that, how's that trended over the last two years, given the difference in financing costs and everything else? How would that differ between the different regions, given the different types, sizes, and farms?
We alternate between North America and Europe each year with our tech demos. Essentially, what we want to show is those products are either in the market or will be soon. That's one element. Those are all real-life solutions. They're not science fair projects. They're also shown to, those kind of results are for a typical farm in the area we are. The results we're showing there, although they can be used everywhere else, they're showing up for a typical farm in Germany. We'll do the same thing when we're in the U.S. for a typical farm in the U.S. Those numbers you can kind of anchor into a farm size. We talked about hectares for acres. That was a little over, I think it was like 3,200 acres.
That gives you a size of how big that farm operation is and the kind of returns that that kind of a farmer would expect. Yes?
Hey guys, you talked about the distribution transformation that's been underway for the last 18 months or so. I was wondering if you could unpack that a little bit more. What additional work do you need to do? I think you talk about three different verticals with three different channels. Where's the biggest growth opportunity? What are some of the KPIs that you are using to measure progress there?
Are you talking about PTx specifically, or are you talking about FarmerCore?
Yeah.
PTx.
Yeah, PTx.
I'm going to have Andrew take that one.
Okay, a question around distribution. As we look at what's a key growth driver for that, I would say the first major unlock is our PTx Elite dealer network. This is our Elite dealer network, which refers to our dealers that once were selling either only Precision Planting or only PTx Trimble products, that now we are working to build a dedicated network of dealers that sell both PTx Trimble and Precision Planting products. If we look at what that means, the Precision Planting network has been historically very strong in North America. The PTx Trimble dealer network has historically been very strong in Europe. By cross-activating, as we call it, these dealers, we increase our coverage of PTx Trimble products in North America and increase our coverage of Precision Planting products right away in Europe. Certainly from a metric standpoint, there's a couple of things we look at.
One of those is coverage, although coverage says how many customers we can touch. The more important metric that we measure our channel based off of is penetration. We want to make sure that our dealers are serving farmers in the markets that they are in and doing so in a very proficient way. When we look at that addressable market that I talked about, the addressable market isn't just the number of new machines sold, it's all machines in their local markets. Making sure and supporting our dealers to make sure that we're walking onto farms, even though it may not be selling a new machine, is really important for that dedicated Precision Ag channel that we call our elite dealers. Does that answer your question?
Maybe just to add a couple of numbers to that, if you take a look at, like Andrew said, we had essentially two different networks coming together to form PTx overall. If you say, can a farmer get access to both product lines today, even if they have to go to two separate dealers, maybe we have over 90% coverage in all the regions except for South America, and it's about 85% coverage in South America. Meaning the farmer has now access to the full portfolio. What we're working on now is melting those two channels together into one full-line channel, which is what Andrew talked about. That's the evolution. Our next first metric was coverage. Next metric is now elite dealer penetration. What else? Question back here?
This isn't a technology question, so I apologize for this. The level of subsidization in Europe, I mean, the stability given diversification, etc., is really remarkable, a real asset to your business. Do you worry about the risk that's being created by subsidies with, you know, is it caught up in some of these trade spats that are happening? How do you think about it?
I don't think it's so much caught up in the trade disputes going on, but we do have a close eye on it relative to affordability of that subsidy as it relates to Europe spending more on military defense. I think that's probably the bigger issue, that as Europe is making choices to increase the amount of spending they're doing on military, it has to come from somewhere. There's some debate about what the impact may be on what's called CAP, the Common Agriculture Policy that governs the subsidies in Europe. We're watching that. The farmers have a huge, powerful lobby in Europe, and there's been attempts to change the diesel subsidies or change some of the impacts on use of pesticide and fertilizer. Those have met with a lot of resistance with farmers, and the regulatory bodies have pulled back.
I think there's a good tension in the system to make sure we find the right balance, but that's probably the thing to watch more than a trade impact. Torsten, anything else you'd say? Okay.
I also wanted to ask a little bit about distribution, or more specifically, sort of bringing the Precision Planting technologies here to Europe, knowing that Trimble had sort of a legacy distribution channel here. How ready is that Precision Planting portfolio to bring to Europe, given different crop types, different size of machines, et cetera? How should we think about that migration of Precision Planting now into the European Trimble channel?
Yeah, if you start at the foundation, I'll have Andrew jump in here, but I'll get a start on it. About five years ago, something like that, we started installing a European base for Precision Planting. We started doing field trials, just like many of you have been to our PTI farm in Illinois, where we do about 200 trials a year on a 400-acre farm. We set up multiple farms all the way from France to Ukraine and did farming in Europe under European conditions to see side by side how this technology compares to the competitors here, because there are some different companies that compete here. We've gathered a foundation of agronomic data, which is the foundation of everything that we do in PTx. That's been established. Secondly, it was to be able to create retrofit kit adaptations to the planters that are in the marketplace.
Horsch and Vaderstad and Kinze and some of the brands that you see here that you don't necessarily see so much in North America. That was step two. Step three was establishing a dealer network. We were on our way. That got significantly accelerated with PTx Trimble. Those are the three ingredients that needed to come together. The last step now is to add what's called ISOBUS compatibility to the technology. It makes it easier to interface with a lot of the European farming operations. That's in process. Those are the four key ingredients. Andrew, anything else that I missed?
Just the one that I would add is also solutions around the crop cycle. As we look at the Precision Planting business, historically that has been almost 100% rooted in planting technologies. As we've moved throughout the crop cycle, really focusing on Europe as well, having the seeding solutions, fertilizer application solutions, and bringing to market our spraying solutions really now complement that product portfolio where we know that the planter market is not as large in Europe as what it is in North America.
Great add. Yes. Steve?
Since we have you on a webcast, I wonder if you might want to make any commentary about thoughts about where we are in the cycle, what 2026 might look like, just any comments in that area.
Thank you for that question. I love this question. In reality, I would say that in three of the four markets, we still feel about where we did: Europe, North America, South America, and Asia. In North America, we've already said that it's probably the most wide-range forecast situation we've had maybe ever. As we look into the data and the behavior of our farmers, the sentiment index, order boards, all those kinds of things, the likelihood of us having a down year next year is increasing. Previously, you've heard me say we're probably going to see a recovery, an up year in all four markets. That's under pressure in North America. I think there's a higher likelihood. We haven't come out with specific guidance yet, but there's a higher likelihood that it'll be a small down next year compared to an up next year.
Just fundamental uncertainty is very strong right now. The farmers, there's with the U.S. potentially supporting Argentina in a bailout, that's got the North America farmers very upset because Argentina is now the supplier of soybeans to China. There's just a lot of dimensions to this topic and has the U.S. farmer on hold.
Time for one more.
On autonomy, what does the farm, what do you anticipate a farm looks like in 10 years and 15 years? What does the journey to autonomy look like in terms of, you know, when does a farmer ultimately step off the field, you know, figuratively speaking?
I think they're going to start stepping off the field this year. We're selling autonomous kits for harvesting, and you'll see them in tillage right behind that. There's this intersection of, technologically, what can we automate? I talked about we have to automate all of those features, and you get a batch of features, then you can automate the task. The other intersection is where can farmers trust us or trust the operation, trust the solution to step away from it? We've said we've got the most automated planter in the industry. It pretty much does everything on its own. The technology piece is high, but the farmer's willingness to actually step away from planting and not be right there watching it all happen is still low because if you get planting wrong, there's nothing else in the cropping cycle that can make up for it.
We're watching for the intersection of those two things. We've got the sequencing set such that we've said we're going to automate an element of all the way around the cropping cycle by 2030, and we're still committed to doing that. We think, as like guidance happened, once you're like, well, I don't know if I really need guidance, I get in an experience like, I'm never going away from this. That's what farmers' reaction has been to our autonomy kits. They see it in the harvesting application, they're like, I'm not sure. Then they get in and they're like, this is fantastic. Why would I ever do it any other way? We think the same thing will happen with tillage. One after another, the confidence will rise and rise and say, this just works. It takes away a complicated task, so I can be doing something else.
I think if your question was five or ten years from now, I think many of the more progressive farmers are going to have many of their tasks automated. They may still do certain applications, and there's many different tasks on the farm. I think there'll still be interaction, but this is going to grow, I think, steadily over the next few years.
Thank you, Eric.
Thank you, everybody, for your engagement. We sure appreciate all that you've done in coming over here with us and hearing our story. We're really excited to show you the factory and the field operations. Thanks, everybody.
All right. For those joining us on the webcast, thank you very much for your attention. That concludes our program for this morning. Thank you.