Case and New Holland parent company CNH Industrial’s construction equipment business was a bright spot during an otherwise tough third quarter, as declining demand and rising U.S. tariffs continue to eat at profit margins.
In CNH’s Industrial Activities segment – consisting of its agriculture and construction equipment business – net sales fell 7% year-over-year in the third quarter to $3.7 billion on lower shipments following declining demand and channel destocking.
CNH construction equipment net sales were up 8% in the third quarter to $739 million based on higher shipments to North America and the company’s Europe, Middle East and Africa region.
However, construction equipment adjusted earnings before interest and taxes fell 59% to $14 million due to rising tariff costs, unfavorable geographic mix and a $12 million negative impact from higher selling, general and administrative expenses. These negative impacts were partially offset by $16 million in favorable net price realization (the net difference between equipment's listed price and the actual selling price).
During the earnings call, Chief Financial Officer Jim Nickolas said CNH has been “a bit more aggressive on price increases as a result of the tariffs than we have seen from our competitors.”
In its third quarter, CNH reported a $5 million negative impact from lowered construction equipment sales volume and mix, as well as a $14 million hit in growing production costs.
In the third quarter, 1,456 new financed Case and New Holland machines were sold in the U.S., according to Fusable’s EDA equipment finance data. Popular models included the Case TV370B compact track loader, the New Holland C337 compact track loader and the New Holland C332 compact track loader. EDA is owned by Fusable, parent company of Equipment World.
Declining Industry Activities net sales were primarily driven by a 10% drop in third-quarter farm equipment sales to just under $3 billion. CNH reported lower shipments to North America specifically after industry demand fell, though this was partially offset by favorable net price realization. Adjusted earnings before interest and taxes from ag equipment sales were down 59% to $137 million.
Consolidated revenues in the third quarter fell 5% year-over-year to $4.4 billion, while net income fell 78% in the same period to $67 million.
CNH updated its 2025 net sales forecasts, now expecting construction net sales to be down 3%-5% and agriculture net sales down 11%-13%.
A key driver behind these negative forecasts, according to CNH, is the company’s growing exposure to increasing U.S. tariffs, including the expanded U.S. steel and aluminum tariffs announced in August.
The company forecasts rising tariffs will cost the company $205 million to $225 million in gross expenses during its full 2025 earnings, including a $60 million to $70 million impact on its construction equipment business.
Current tariff mitigation efforts include identifying alternative sources for its supply chain and adjusting pricing in North America. Though CNH plans to “fully offset the tariffs impacts with additional mitigation actions,” the company said it continues to share the net tariff costs with customers.
CNH is also cutting operating costs through lean manufacturing and strategic sourcing to mitigate profit loss after the company reduced equipment production this year. CNH recently finalized its plan to stop production at its Burlington, Iowa, assembly plant.
