As it approaches the end of a year of rapid profit growth, agricultural equipment maker Agco Corp expects 2012 to be another "good year," the company's chief executive said.
"It looks like the industry as such will have another good year in 2012," said Martin Richenhagen, head of the world's third-largest maker of farm equipment, at the Reuters Manufacturing and Transportation Summit in New York on Wednesday.
The growing populations and prosperity of rapidly emerging economies, including India and China, have made this a boom period for agriculture as residents of those countries start to eat more meat, which requires farmers to grow more grain to feed livestock.
German-born Richenhagen, who this year became a U.S. citizen, said he does not expect Europe's debt crisis to take much if any toll on demand for grain. But that has not stopped the Duluth, Georgia-based company from looking for ways to protect itself from what Richenhagen considers the low risk of another financial crisis along the lines of what the world experienced in 2008 and 2009.
"You try to figure out where is your money? And we did that during the financial crisis, we made sure that we always have like $500 million, $600 million in cash and we made sure it was not with Lehman Brothers at that time," Richenhagen said. "You need to control that, in a way that you spread it not only to various banks but also to different countries. You like to have some money in Japan, China, to spread that out equally."
But he said he has no worries about the security of the banks Agco uses: "The banks we work with report that they are very stable."
Richenhagen is due to meet with analysts on Friday to lay out 2012 profit expectations for the company. Wall Street, on average, looks for profit to rise about 9 percent at the company next year, according to Thomson Reuters I/B/E/S.
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