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AGCO Corp. Q1 2008 Earnings Call Transcript

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2008-04-29 20:56:20.0

Tags: AGCO Corp.

Question-and-Answer Session

[Operator Instructions]. Your first question comes from the line of Stephen Volkmann with JPMorgan.

Stephen Volkmann - JPMorgan

Hi, good morning

Andrew H. Beck - Senior Vice President and Chief Financial Officer

Good morning

Stephen Volkmann - JPMorgan

I was hoping you might comment a little bit on your capacity utilization, and I am really focused in the higher horsepower equipment here. Maybe if you could by region and give us a sense of what you are doing with respect to increasing capacity in those regions as well.

Martin H. Richenhagen - Chairman, President and Chief Executive Officer

Actually, all our high horsepower tractors on wheels, so the conventional tractors are made in factories in Europe and in South America. We have some projects we work on in our factory in Finland in order to prepare this factory for the growth that we might see in 2009. We have I think no major problem within our big factory in France and we already decided on some investments in the area of $13 million.

Andrew H. Beck - Senior Vice President and Chief Financial Officer

$13 million to $15 million.

Martin H. Richenhagen - Chairman, President and Chief Executive Officer

$13 million to $15 million in our German Fendt factory to cope with this growing demand. Here in the U.S., we actually have a factory in Jackson, Minnesota for the big high horsepower four-wheel drive articulated tractor and the track tractor with no restrictions in capacity. So overall, we are fine and we are actually trying to make reasonable investments in order not to change our breakeven point too much. And also, we have in mind of always not only capacity, but also the return on invested capital.

The important achievements we so far could generate is that we are in very close contact to key suppliers. And my overall summary is that we do pretty well. We certainly have the one or the other little problem here and there. But I think we do very well and may be better than the industry.

Stephen Volkmann - JPMorgan

Okay, great. And then just quick follow-up Martin on central and east Europe could sort of size that opportunity for us maybe with respect to what you do in Europe and... so we can get a sense of how big that's become for you and what the growth rates look like there and any ...maybe any market share shift that you've sensed might be happening there.

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