CNH Industrial 2016 revenues down 4% to $24.9 billion, net loss for the year

Updated Feb 10, 2017
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CNH Industrial reports $24.9 billion in revenue for 2016, down 4 percent compared to last year, with a net loss of $249 million following a non-tax deductible charge of $551 million following a European Commission settlement and a $60 million charge related to the repurchase of parts of Case New Holland Industrial Inc.

Adjusted net income was $482 million for the year, or adjusted diluted earnings per share of $0.35.

The company reports Industrial Activities operating profit of $1.29 billion for the year, compared to $1.43 billion in 2015. For the fourth quarter, operating profit was $412 million, compared to $563 million for the same period in 2015.

“While the Agricultural Equipment market remained at historically low demand levels in 2016, our margin performance was in line with our expectations and we made significant progress on further reducing channel inventory,” says CEO Richard Tobin. “The Commercial Vehicles segment continues to improve in profitability and market share in the EMEA region. While the LATAM market was generally challenging for all segments, we are starting to see signs of recovery there, especially in the Agricultural Equipment segment with shipments up 30 percent in the fourth quarter of 2016 compared to the fourth quarter of 2015. In addition to solid operating execution, we were able to significantly over-achieve on our net industrial debt target for the year and to reduce our future interest costs through two capital markets transactions, both of which further our efforts to achieve an investment grade credit rating.”

Net sales for the Construction Equipment segment dropped by 9.4 percent for 2016 compared to 2015, “due to unfavorable industry volume and product mix in NAFTA and LATAM and negative price realization.” Fourth quarter net sales decreased 5.1 percent compared to 2015.

The segment’s operating profit for the year dropped dramatically to $2 million, compared to $90 million in 2015. CNH says this was due to decrease volume in “the heavy product range” in the NAFTA and LATAM regions. For the fourth quarter, the company saw an operating loss of $30 million compared to an operating profit of $18 million compared to the same period in 2015. This was due to “lower industry volume, a significant reduction in manufacturing volume to reduce inventories to anticipate new product launches, negative price realization and an unfavorable foreign exchange impact on product cost, partially offset by cost containment actions.”

Outlook for 2017

CNH says it will conduct multiple restructuring efforts this year at a cost of roughly $100 million to create about $60 million in savings for the year and $80 million “on an annualized basis.”

For 2017, the company expects Industrial Activities net sales to be in the $23 billion to $24 billion range and adjusted diluted earnings per share between $0.39 and $0.41.