CNH Reports 23-Percent Construction Equipment Sales Jump in 4Q07
CNH Global N.V. last week reported fourth-quarter 2007 net income of $114 million, up compared to net income of $35 million in the prior year. Results include restructuring charges, net of tax, of $6 million in the fourth quarter of 2007, compared with $58 million in 2006. Net income excluding restructuring charges, net of tax, was $120 million, up 29 percent compared to $93 million in the prior year. Fourth-quarter diluted earnings per share were $0.48, compared with $0.15 per share in 2006. Before restructuring, net of tax, fourth-quarter diluted earnings were $0.50 per share, compared with $0.39 per share in the prior year.
For full-year 2007, net income of $559 million was up 91 percent compared to net income of $292 million in 2006. Results include restructuring charges, net of tax, of $61 million in 2007, compared with $71 million in the prior year. Net income excluding restructuring charges, net of tax, was $620 million in the year, up 71 percent compared to $363 million in 2006. Full-year diluted earnings per share were $2.36, compared with $1.23 per share in the prior year. Before restructuring, net of tax, full-year diluted earnings were $2.61 per share, compared with $1.53 per share in 2006.
“Our Equipment Operations gross margin rose to 18.8 percent and our operating margin rose to 8.2 percent, making them our best annual margins in CNH history,” said Harold Boyanovsky, CNH president and CEO. “Our revenue growth and margin improvements are a direct result of our actions to revitalize our brands, enhance our customer and quality focus, and leverage our global footprint, which also should contribute to further improvements in 2008. Our full-year 2008 financial outlook is an expected range of diluted EPS, of $3.30 to $3.60.”
Net sales of equipment, comprising the company’s agricultural and construction equipment businesses, were $4.1 billion for 2007, compared to $3.0 billion for the same period in 2006. Net sales increased 36 percent, including 7 percent related to currency variations.
Construction equipment net sales increased to $1.3 billion, up 23 percent (including 8 percent related to currency), compared to the prior year.
In the first quarter, CNH acquired Kobelco-Case Machinery (Shanghai) Co. Ltd., which manages the Case Construction brand distribution network in China.
For the full year, CNH expects North American industry retail unit sales of both heavy and light construction equipment to be down 5 to 10 percent compared with 2007, as housing starts and activity levels continue to decline.
For the year, CNH expects both heavy and light construction equipment industry retail unit sales outside of North America to be flat to up slightly compared with 2007. CNH expects industry sales of total heavy and light equipment to be flat to down slightly in Western Europe, up 5 to 10 percent in Latin America and up 15 to 20 percent in rest-of-world. In total, CNH expects worldwide industry retail unit sales of both heavy and light construction equipment to be flat to up 5 percent compared with 2007.
Based on these agricultural and construction equipment market outlooks and initiatives to properly position the company's four main brands and improve efficiencies, CNH anticipates an increase in net sales of equipment of 10 to 15 percent and to generate 2008 diluted earnings per share, net of tax, in the range of $3.30 to $3.60, compared with $2.36 for the full year 2007. Restructuring costs, net of tax, in 2008 are expected to be about $10 million primarily related to previously announced actions.