Agritech Business Barometer Public report of the survey about the worldwide situation of the agricultural machinery business May 2015 11 th edition Contact: gerd.wiesendorfer@vdma.org Page 1 7th May 2015
What is the Agritech Business Barometer? A survey within senior management of the global agricultural machinery industry (ca. 85% manufacturers and 15% importers) Project managed under the umbrella of the new global network for the agricultural machinery associations and industry: Agrievolution Around 250 participants from China, (Western) Europe (represented by CEMA with the results of its separate monthly survey), India, Japan, South Korea, Turkey and the United States Implementation of the survey by the correspondent national associations Project lead and summary of the results: VDMA (Germany) Objectives: illustration of the current and future branch development for the most relevant topics of the industry General evaluation of the business Order intake Turnover Employmenent Delivery times Machinery stocks Farmers mood and economic conditions Others Survey periods: April and October (Start was in 2010) Contact: gerd.wiesendorfer@vdma.org Page 2 7th May 2015
Indicators for a better business in the months ahead Executive Summary of the Survey in April 2015 The Agrievolution business climate index rises by 7 points with the new survey edition - a fact that might be surprising at first glance. But the improvement only comes from the anticipation of a better business in the next six months, while the current business is evaluated at a similarly low level than in the second half 2014. On a global average, % of the agricultural machinery manufacturers regard their situation to be good, while % describe it as unfavourable. The turnover development in the first 3 months was a clear decline. The estimation for global sales is between -5 and -10%. But regional differences are well pronounced a more dynamic development is anticipated for the Asian markets, mainly China, but also Turkey. Europe and the USA are facing the most pronounced recession trends. South America did not take part in this survey, but would probably show similar results. The optimism for a more lively demand in the short future comes from an improved order intake situation in several countries, but this upward trends is not predominant yet in America and Europe. A certain easing of the previous financing restrictions is one of the core results of this survey. Government support is generally considered to be positive, although there are voices that ask for more activities here, e.g. by the Asian manufacturers to help improving their position on the world markets. Also from the farmers perspective, the subsidies still play a major role, with consequent complaints when programs are phased out how it seems to be the case in Turkey now. The general mood of the farmers is worse than in 2014 due to the lower commodity prices and thus profitability. This might not change in the short-term and will rather slow down demand for new machines. Contact: gerd.wiesendorfer@vdma.org Page 3 7th May 2015
Short-term optimism pushes the business climate for the sector globally upwards Agritech Business Climate Index Possible range from -100 to +100 80 60 20 0 Climate Index -20 Current Situation - Future Situation Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Climate Index 1 34 65 44 35 19 29 32 26-7 0 Current Situation -23 8 60 49 37 25 25 36-5 -9 Future Situation 26 61 71 38 33 13 33 27 23-8 10 Source: Agritech Business Barometer, Agrievolution weighted global average Contact: gerd.wiesendorfer@vdma.org Page 4 7th May 2015
Manufacturers in China, India and Turkey are in a good mood. Agritech Business Climate Index Possible range from -100 to +100 100 Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 80 60 20 0 0-20 - -60-80 World* USA Western Europe Turkey India China Korea Japan Remark: low number of participants in April 2015 for the US and India that might not be representative for the entire country Source: Agritech Business Barometer Survey, Agrievolution *weighted global average Contact: gerd.wiesendorfer@vdma.org Page 5 7th May 2015
Current demand is globally still on a weak level Question: We consider our current business to be. Answers from manufacturers / importers according to location 100% 80% 60% % 20% 0% 6 4 3 6 12 14 17 17 13 17 22 25 35 37 34 26 31 36 36 34 39 44 29 49 41 46 35 38 38 39 28 25 15 19 16 18 8 12 10 3 5 4 5 5 Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 very unfavourable unfavourable satisfying good very good Source: Agritech Business Barometer, Agrievolution weighted global average Contact: gerd.wiesendorfer@vdma.org Page 6 7th May 2015
especially when we focus on the established markets America, Europe and Japan. Question: We consider our current business to be. Answers from manufacturers / importers according to location 100% 6 10 6 8 14 20 80% 60% 37 55 43 45 38 33 very unfavourable unfavourable % 20% 0% 10 25 35 35 16 5 5 World USA Western Europe Remark: low number of participants for the US and India that might not be representative for the entire country Source: Agritech Business Barometer Survey April 2015, Agrievolution 10 26 23 Turkey India China Korea Japan 59 6 6 50 8 satisfying good very good * weighted global average Contact: gerd.wiesendorfer@vdma.org Page 7 7th May 2015
But the outlook is more optimistic again. Question: We expect our overall turnover within the next 6 months to. Answers from manufacturers / importers according to location 100% 80% 18 8 6 18 15 14 21 14 18 21 38 decrease 60% % 38 69 76 33 46 37 36 33 31 remain unchanged 20% 44 53 46 34 46 45 43 grow 0% Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Source: Agritech Business Barometer, Agrievolution weighted global average Contact: gerd.wiesendorfer@vdma.org Page 8 7th May 2015
Compared to last survey: More growth perspectives in China, Japan and Europe Question: We expect our overall turnover within the next 6 months to Answers from manufacturers / importers according to location 100% 80% 33 15 20 10 13 19 35 17 decrease 35 60% % 31 29 39 41 50 remain unchanged 70 67 20% 38 21 50 33 grow 0% World USA Western Europe Turkey India China Korea Japan Remark: low number of participants for the US and India that might not be representative for the entire country Source: Agritech Business Barometer Survey April 2015, Agrievolution * weighted global average Contact: gerd.wiesendorfer@vdma.org Page 9 7th May 2015
Accelerated working staff reduction in the US, while the Asian factories are looking for additional people Question: Our plans regarding the workforce (regular employees): in % of the interviewed persons according to country of company location 19 29 19 10 12 18 reduce 55 62 48 77 60 54 59 90 keep unchanged 45 34 19 10 4 World USA W. Europe Turkey India China Korea Japan increase Remark: low number of participants for the US and India that might not be representative for the entire country Source: Agritech Business Barometer April 2015, Agrievolution * weighted global average Contact: gerd.wiesendorfer@vdma.org Page 10 7th May 2015