CNH Second Quarter 2012 Net Sales Top $5 Billion

Aug. 3, 2012
CNH Global N.V. last week announced financial results for the second quarter ended June 30. Net sales increased 3 percent to $5.0 billion, from $4.9 billion in the year-ago quarter.

CNH Global N.V. last week announced financial results for the second quarter ended June 30. Net sales increased 3 percent to $5.0 billion, from $4.9 billion in the year-ago quarter, as firm global demand for agricultural equipment, on the back of favorable agricultural commodity prices, compensated for a more mixed trading environment in the construction equipment sector.

Equipment operations posted a comparable period improvement in gross profit margin of 80 basis points to 21 percent for the second quarter and an operating profit of $524 million as higher revenues and positive net pricing compensated for increased SG&A expenditures and R&D investment and the negative impact from foreign exchange. Equipment net sales during the quarter were 80 percent agricultural equipment and 20 percent construction equipment, in line with last year.

In the second quarter, Equipment Operations generated $789 million in cash flow from operations, a 67-percent increase over the prior year, resulting in $281 million cash generation on a year-to-date basis, as improved net sales and operating performance more than offset the increased net working capital needed to support business activity.

For the quarter, net income, before restructuring and exceptional items, was $356 million, an increase of 11.3 percent as a result of solid trading conditions in most regions during the quarter, satisfactory industrial performance, and improved performance by the group’s financial services business offsetting negative currency translation in the period and reduced contribution from unconsolidated industrial subsidiaries. This resulted in the group generating diluted earnings per share of $1.47, up 11 percent compared to $1.33 per share in the comparable period of 2011.

Second-quarter 2012 net sales of CNH construction equipment increased 4 percent on a constant currency basis (a 3-percent loss on a reported basis) as market conditions remained largely flat compared to the first quarter in the North American market and improved equipment availability drove higher sales in the EAME & CIS markets. Challenging market conditions in Europe and Brazil, coupled with the negative effects of currency translation led to a comparative period margin decline of 70 basis points from the prior period.

Worldwide construction equipment market share was up in the second quarter, with gains in EAME & CIS and APAC light equipment markets and the North American heavy sector, as a result of new product launches and good equipment availability. Worldwide production of construction equipment was moderately above retail sales during the quarter. The Group expects to moderately reduce construction equipment manufacturing levels, primarily in Latin America and Europe, to balance inventory levels over the remainder of the year.

Despite a mixed economic climate in certain of the groups’ operating regions, the negative effect from the translation of earnings to the U.S. dollar, and the poor climatic conditions in the United States, CNH confirms its full-year financial guidance, expecting revenues to be up 5 percent and operating margins more than 8.6 percent.

CNH Global N.V. is a world leader in the agricultural and construction equipment businesses under the Case and New Holland brand families. CNH Global is a majority-owned subsidiary of Fiat Industrial S.p.A.