Key Takeaways:
- Valmont’s Agriculture segment reported net sales of $265.3 million, an 11.1% decrease year-over-year.
- North American agriculture sales were impacted by lower grain prices but supported by replacement sales due to severe weather events earlier in the year.
- International agriculture sales saw a significant decline, particularly in Brazil, offset partially by growth in the EMEA region.
- Operating income for the Agriculture segment increased to $28.9 million, driven by lower SG&A expenses despite a drop in volumes.
Agriculture Segment Performance in Q3 2024
Valmont Industries’ Agriculture segment recorded net sales of $265.3 million for the third quarter of 2024, reflecting an 11.1% year-over-year decline compared to the same period in 2023. The decrease in sales was attributed to a combination of factors, including market conditions in North America and a significant drop in demand from Brazil.
In North America, the agriculture market faced lower grain prices, which softened demand for irrigation equipment. Despite these challenges, Valmont’s ability to respond quickly to severe weather events earlier in the year helped drive replacement sales in the Midwest, partially offsetting the overall decline. Irrigation equipment volumes were slightly down compared to the previous year, with average selling prices remaining consistent.
Internationally, the Brazilian market saw a sharp decrease in sales due to normalizing backlog levels and the continued impact of lower grain prices, which affected purchasing behavior among growers. This decline in Brazilian sales was offset to some extent by growth in the Europe, Middle East, and Africa (EMEA) region, as well as contributions from Valmont’s recent acquisition of HR Products.
Operating Income and Margin Improvement
Despite lower sales, the Agriculture segment achieved an operating income of $28.9 million, or 11.0% of net sales, compared to a $99.7 million loss in the third quarter of 2023. The improvement in operating income was primarily driven by reduced SG&A expenses and operational efficiencies, which helped mitigate the impact of lower volumes and a higher mix of project sales.
Valmont’s focus on cost management and operational efficiency allowed the Agriculture segment to maintain profitability even in the face of challenging market conditions, especially in Brazil. The company’s continued investment in precision agriculture and advanced technology solutions also supports long-term growth in the segment.
Outlook for the Agriculture Segment
Looking ahead, Valmont expects ongoing challenges in the agriculture market, particularly in regions affected by lower grain prices. However, the company remains focused on leveraging its global reach and advanced irrigation technology solutions to meet the evolving needs of farmers worldwide. While North American demand is expected to remain muted, the company anticipates further growth in the EMEA region and continued support from replacement sales due to extreme weather events.
Valmont reaffirmed its full-year 2024 guidance for the Agriculture segment, with net sales expected to decrease between 10.0% and 15.0% compared to 2023. Despite these challenges, the company’s strategic initiatives in precision agriculture and aftermarket parts continue to position the segment for long-term resilience and growth.
CEO’s Comments on the Agriculture Segment
Avner M. Applbaum, Valmont’s President and CEO, acknowledged the challenges faced by the Agriculture segment but praised the team’s ability to adapt and respond to market fluctuations. He noted, “While the North American and Brazilian markets remain soft, I’m proud of our swift response to supply replacement equipment following the Midwest storms. We are committed to supporting our dealers and customers, delivering higher operating margins, and continuing our focus on long-term growth.”
Valmont Industries Latest News
Reports Q2 2024 Financial Results (2024/07/25)
Valmont Industries reported a slight decrease in net sales to $1.0 billion in Q2 2024. However, the company saw a notable increase in operating income and earnings per share, indicating the effectiveness of its operational and pricing strategies. The Agriculture segment experienced mixed results, with North American sales increasing due to severe weather conditions, while international sales, particularly in Brazil, were softer due to lower grain prices. Valmont generated operating cash flows of $130.8 million and returned $27.1 million to shareholders. The company raised its full-year 2024 diluted earnings per share guidance to $16.50 to $17.30, driven by improved operating margins and strategic focus on high-return areas.
Read the entire financial results here.
Releases 2024 Sustainability Report (2024/06/12)
Valmont Industries released its 2024 Sustainability Report, marking its ninth since 2015. The report highlights Valmont’s commitment to sustainability, focusing on a sustainable future for the next generation. Key achievements include recommitment to 2025 environmental goals, reduction in carbon intensity, electricity usage reduction, and low-flow initiative compliance. The report also highlights Valmont’s life cycle assessments and awards for its Environmental, Social, and Governance (ESG) initiatives. Notable improvements include a 13.5% reduction in the Total Recordable Incident Rate (TRIR) and a record global response rate of 87% in its most recent employee engagement survey. The report also highlights the Indapur Taluka Galvanizing Facility in India, which was awarded The Valmont Sustainability Award for its significant improvements in water and energy usage efficiency and waste reduction.
Reports Financial Performance for Q4 and FY 2023 (2024/02/22)
Avner M. Applbaum, President and CEO of Valmont, expressed satisfaction with the company’s performance despite reduced sales volumes. He highlighted successful pricing strategies, improved operational efficiencies, and solid results in the Infrastructure segment. Looking ahead to 2024, Applbaum emphasized a focus on maintaining higher gross profit margins and reducing SG&A expenses. Valmont Industries remains committed to its strategic priorities, including operational efficiency, pricing strategies, and market leadership in infrastructure and agriculture. As Valmont enters 2024, the emphasis will be on adapting to market conditions and making strategic capacity investments to meet customer needs.
Q3 2023 Financial Results: Sales Decline and Organizational Realignment (2023/10/26)
Valmont’s agriculture segment sales decreased by 8.8% YoY, with North America affected by lower irrigation equipment sales volumes. However, international sales grew, particularly in the EMEA region and Brazil. The operating loss in the agriculture segment was $99.7 million due to a $137.3 million impairment of goodwill and intangible assets. Valmont announced an organizational realignment program aimed at reducing layers of management and offering a voluntary early retirement program. The company updated its full-year financial outlook with a net sales growth of (-3%) to (-4%) and GAAP Diluted Earnings per Share of $7.20 to $7.50. Avner M. Applbaum, President and CEO of Valmont Industries, emphasized the company’s long-term positive outlook and its focus on maximizing financial performance through disciplined capital allocation and ROIC.
Read more here.
Valmont Inks A USD 85M Purchase Order (2023/01/10)
Valmont has signed a supply deal to provide automated irrigation equipment and cutting-edge technologies for agricultural development projects in Africa. Valley Irrigation, a Valmont company, will use its industry-leading technologies to increase agricultural yields, reduce inputs, and conserve water through remote monitoring and controls. The project exports are anticipated to start in Q2 2023.
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