Agco announces restructuring program, up to 6% workforce reduction

In a regulatory filing, Agco disclosed that on June 24, the company announced a restructuring program in response to increased weakening demand in the agriculture industry. The initial phase of the Program is focused on further reducing structural costs, streamlining the company’s workforce and enhancing global efficiencies related to changing the company’s operating model for certain corporate and back-office functions and better leveraging technology and global centers of excellence. The company estimates that it will incur charges for one-time termination benefits of approximately $150M-$200M in connection with this phase of the Program, primarily consisting of cash charges related to severance payments, employees benefits and related costs. The company expects the majority of these cash charges will be incurred in 2024 and the first half of 2025. Once fully implemented, the company expects this phase of the Program to yield annual run-rate benefits and cost savings of approximately $100M-$125M. The initial phase of the Program is expected to result in a net reduction of the company’s salaried workforce by up to approximately 6% as compared to its salaried workforce as of December 31, 2023. As part of the Program, the company expects to evaluate other opportunities to further enhance global operating efficiencies that could result in additional restructuring charges related to future phases of the Program. The company is unable at this time to quantify the charges and benefits related to potential future phases of the Program.