Despite a 3-percent decline in net sales for the second quarter, CNH Industrial saw profit increase 5 percent largely due to strong performance in the company’s agricultural, commercial vehicle and powertrain segments.
CNH, makers of Case and New Holland heavy equipment, reported total revenues of $6.7 billion and a net profit of $129 million.
“Our second quarter results were solid; we continued to demonstrate our ability to execute across the breadth of our business and geographic portfolio despite the large disparity of demand conditions prevalent in the capital goods sector,” said Richard Tobin, CNH Industrial CEO, in a prepared statement. “Our ability to increase operating profit in the Agricultural Equipment segment and our trend of improved results in Commercial Vehicles solidify our belief that the benefits of our efficiency plan on product cost and quality are taking hold.”
During the quarter, agricultural equipment sales fell 7.5 percent to $2.8 billion though operating profit increased 14 percent to $301 million.
The company says the sales decrease was due to “lower industry volume, unfavorable product mix in the row crop sector in [North America] and unfavorable industry volume in the small grain sector in [Europe, the Middle East and Africa].” Ag sales in the Asia Pacific region increased due to higher volume in Australia, while specialty tractor and harvester sales in Europe remained strong. Demand for harvesters in Latin America offset the industry-wide decline in tractor demand, the company says.
Construction equipment sales fell 19.6 percent to $595 million while operating profit fell 51 percent to $17 million. The declines came primarily as a result of lower demand in North America.
With an increase in truck deliveries in Europe, CNH commercial vehicle sales rose 5.1 percent to $2.6 billion while operating profit rose 50 percent to $100 million. Meanwhile, powertrain sales rose 8 percent to $1 billion with operating profit up 25 percent to $66 million. CNH notes sales to external customers accounted for 46 percent of its total powertrain sales, “as the benefits of SCR (Selective Catalytic Reduction)-only technology solutions continue to gain market recognition.’
Looking forward to the rest of 2016, the company’s outlook remains unchanged. CNH expects net sales of its Industrial Activities businesses to end the year between $23 billion and $24 billion, which would be an 11-percent drop from 2015.