"This joint venture agreement is another very significant step in the growth strategy of our global engine business," said Martin Richenhagen, AGCO Chairman, President and Chief Executive Officer. AGCO plans to make an investment of $9 million in the joint venture over the next three years.
AGCO and CTP will both have a 50 percent ownership in the joint venture. The joint venture will be responsible for the assembly and distribution of the full range of AGCO SISU POWER engines throughout Russia and CIS. The joint venture will become the key engine supplier for all major CTP plants manufacturing both industrial and agricultural machinery between 50HP and 350HP and will also sell engines to third party customers mainly in the CIS countries. AGCO SISU POWER will provide its technology and manufacturing know-how, while CTP will contribute a strong market position and the knowledge of the Russian market. The agreement is accompanied by an order from CTP for 750 AGCO SISU POWER engines manufactured in AGCO's Linnavuori, Finland manufacturing facility to be delivered during 2008 for the initial installation and development program.
"The introduction of new emissions requirements and the need for better economy and reliability mean that engine performance is becoming increasingly important to owners in Russia and CIS," explained Hubertus Muehlhaeuser, Senior Vice President and General Manager Engines. "The new facility will be located in one of CTP's existing plants in Vladimir near Moscow and is planned to have an initial capacity of up to 20,000 engines per year. We expect that the first engines will be produced before the end of this year. We are very confident that the combination of AGCO's engine technology with CTP's existing products and customer base will lead to a highly successful business operation that will enhance the shareholder value of both companies."
Michael Bolotin, President of CTP said, "The envisaged joint venture will be the first company in the Russian and CIS market that manufactures world-class engines. I am sure that it will strengthen both partners' positions: AGCO will gain access to a major new market for diesel engines in Russia and CIS, and CTP's companies, as well as other Russian and CIS companies, will obtain the opportunity to install modern, clean, fuel efficient engines in their machinery."
Safe Harbor Statement
Statements which are not historical facts, including expectations regarding market positioning, and sales growth are forward-looking and subject to risks that could cause actual results to differ materially from those suggested by the statements. These risks include possible declines in demand for products as a result of weather, demand and other conditions that impact farm income, actions by producers of competitive products, and the general risks attendant to coordination of efforts among two businesses. Further information concerning these and other risks and uncertainties is included in AGCO's filings with the Securities and Exchange Commission, including AGCO's Form 10-K for the year ended December 31, 2007. AGCO disclaims any obligation to update any forward-looking statements.
Founded in 1990, AGCO Corporation (NYSE: AG) (www.agcocorp.com) is a global manufacturer of agricultural equipment and related replacement parts. AGCO "Your Agriculture Company" offers a full product line including tractors, combines, hay tools, sprayers, forage, tillage equipment and implements, which are distributed through more than 3,000 independent dealers and distributors in more than 140 countries worldwide. AGCO products are sold through the core brands: Challenger(R), Fendt(R), Massey Ferguson(R) and Valtra(R). AGCO provides retail financing through AGCO Finance. The Company is headquartered in Duluth, Georgia, and in 2007 had net sales of $6.8 billion.
About Concern Tractor Plants
Concern Tractor Plants (CTP) is a leading Russian machine building company and belongs to the top 10 of the largest companies of heavy mechanical engineering in the world. CTP is a leader not only in the domestic market, but also in a number of CIS countries. The production portfolio includes: industrial, military, agricultural, municipal - building, harvesting machinery, components and spare parts, and production for railways. CTP consolidates 14 industrial enterprises, three trading-service companies, a number of specialized R&D offices and a Scientific Research Institute. The total number of employees is approximately 45,000 people. CTP operates in more than 40 countries worldwide. In 2007, the cumulative annual sales volume exceeded $1.35 billion, having increased 31.5 percent for the year.
SOURCE: AGCO Corporation
Rebecca Fabian, +49 221 420 75 28
Greg Peterson, 770-232-8229
Director, Investor Relations