AEDNews - Construction Equipment Industry News|
CNH Reports First Quarter Sales Up 22 Percent
CNH Global N.V. recently announced financial results for the quarter ended March 31, 2012. For the quarter, net sales increased 22 percent (25 percent on a constant currency basis) to $4.6 billion as a result of solid trading conditions for agricultural machinery (on the back of increased planted acreage driven by firm commodity prices) and construction equipment (driven largely by increased demand in the Americas). Equipment operations posted an operating profit of $406 million as a result of higher revenues, increased industrial utilization, improved product mix, and improved net pricing.
The breakdown of net equipment sales in the quarter was 78 percent agricultural equipment and 22 percent construction equipment. The geographical distribution of net sales in the quarter was 45 percent North America, 31 percent EAME & CIS, 15 percent Latin America, and 9 percent APAC markets.
Equipment Operations used $508 million in cash flow from operations for the quarter to support an increase in net working capital resulting from an increase in production rates implemented to satisfy equipment demand. Capital expenditures totaled $101 million in the quarter, an 87 percent increase from the comparable period, largely as a result of investments in new manufacturing sites and product launches in both the agricultural and construction equipment segments; some 69 percent of the capital spend in the period was on new products and production capacity. CNH's Equipment Operations ended the period with a net cash position of $2.2 billion. The 31 percent effective tax rate for the first quarter is lower than the Group's full year 2012 forecasted effective tax rate of 32 percent to 35 percent, due primarily to a favorable geographic mix of earnings in the quarter.
Net income before restructuring and exceptional items for the quarter was $269 million as a result of strong top line and industrial operating performance, and a lower tax rate. This resulted in the Group generating diluted earnings per share of $1.11 (before restructuring and exceptional items), up 95 percent compared to $0.57 per share in the comparable period of 2011.
New Manufacturing Investments and Commercial Initiatives
On Feb. 15, CNH hosted a Russian Government delegation at its consolidated JV industrial operations in Naberezhnye Chelny, Tatarstan, Russia. The event celebrated the completion of first stage production activities at the plant and the signing of a Memorandum of Understanding with the Republic of Tatarstan for the supply of 80 locally manufactured New Holland tractors and combines.
On March 5, CNH announced its plans to expand its manufacturing footprint in Brazil with an investment of R$600 million (approximately $320 million) to establish a new construction equipment plant in Montes Claros, Minas Gerais. This new facility is scheduled to begin operations in 2014. Production will be adjusted to follow the growth of the Brazilian market, and the facility will also relieve capacity constraints at the Belo Horizonte plant.
On March 8, CNH announced a long-term strategic partnership with Orkel AS, the Norwegian market leader in high performance fixed chamber round balers, compactors and tractor trailers. CNH will acquire intellectual property rights and tooling for Orkel's fixed chamber round balers, and Orkel will become CNH's preferred engineering partner for the development of a high performance/heavy duty new generation of fixed chamber round balers. Orkel-CNH products will be sold under the Orkel, New Holland Agriculture and Case IH brands through their respective dealer networks.
On April 10, CNH announced its commitment to double its investment at the manufacturing site in Cordoba, Argentina, for the production of combines and tractors for the Latin American market.
2012 Full Year Market Outlook
Worldwide agricultural and construction equipment markets are expected to remain positive for 2012, with agricultural equipment retail unit demand projected to be flat to up 5 percent on the back of firm agricultural commodity prices. Construction equipment demand is expected to continue its recovery with industry retail unit sales expected to be up 5 to 10 percent.
Construction Equipment Industry and Market
Global construction equipment industry retail unit sales declined 6 percent in the first quarter compared to the prior year, as declining demand in China drove the APAC region down 24 percent. Light equipment global demand was up 12 percent and heavy equipment demand declined 19 percent, with the APAC region down 31 percent. The North American market registered a substantial year-over-year improvement with demand up 45 percent (light equipment volumes up 52 percent and heavy equipment up 30 percent). EAME & CIS markets continued to improve, up 14 percent, as the industry continued to rebuild from the prior year's low levels. Latin America demand was up 9 percent for light equipment and down 1 percent for heavy equipment.
CNH Construction Equipment First Quarter Results
First quarter 2012 net sales in the construction equipment sector grew 41 percent (44 percent on a constant currency basis) as a result of market improvements in every region and especially in North America, where sales more than doubled compared to the same period last year. Increased sales and production volumes led to an operating result of $34 million or 3.3 percent, up from a loss of $(17) million for the first quarter 2011, as increased revenue, improved product pricing, and improved capacity utilization in North America and in Europe more than offset the negative currency effect of the Japanese Yen on purchased whole goods in the excavator product range.
First quarter market share was up in light equipment as the new products introduced in 2011 continue to be well-received by customers. Market share in the heavy equipment segment was in line with the market trend in every region with a gain in the Latin American market.
During the first quarter of 2012, New Holland Construction launched the new Tier 4A/Stage IIIB compliant B95C and B110C tractor loader backhoes in North America at the World of Concrete show in Las Vegas, Nev. In Europe, the brand launched the LM625 telescopic handler, W270 and W300 wheel loaders, as well as the E175C and E195C crawler excavators. At the World of Concrete show in Las Vegas, Nev., Kobelco Construction launched two new Tier 4A/Stage IIIB compliant excavator models: the Mark 9 SK485 excavator and Mark 9 SK210.
In North America, Case Construction Equipment launched new 580N, 580SN, 580SN wide track, and 590SN tractor loader backhoe models, all Tier 4A/Stage IIIB compliant, the new CX210C and CX470C crawler excavators, the 621F wheel loader, and the 885B motor grader. In Europe, the brand launched the new 1121F and 1021F wheel loader models and new CX210C and CX235C crawler excavator models.
CNH Global N.V. is a world leader in the agricultural and construction equipment businesses. Supported by approximately 11,300 dealers in approximately 170 countries, CNH brings together the knowledge and heritage of its Case and New Holland brand families with the strength and resources of its worldwide commercial, industrial, product support and finance organizations. CNH Global N.V., whose stock is listed on the New York Stock Exchange (NYSE: CNH), is a majority-owned subsidiary of Fiat Industrial S.p.A. (FI.MI). More information about CNH and its Case and New Holland products can be found online at www.cnh.com
Article Date: 2012-04-29
Source: CNH Global NV
Copyright(C) 2012 Associated Equipment Distributors. All Rights Reserved.