LONDON, U.K. —CNH Industrial N.V. today announced consolidated revenues of $27,361 million for the full year 2017, up 10% compared to 2016. Net sales of Industrial Activities were $26,168 million for the year, up 11% compared to 2016. In the fourth quarter, consolidated revenues were $8,102 million, up 16% compared to the fourth quarter of 2016. Net sales of Industrial Activities were $7,798 million for the fourth quarter of 2017, up 17% compared to the fourth quarter of 2016. Net income was $313 million for the full year 2017 and includes a non-cash pre- and after- tax charge of $92 million due to the deconsolidation of CNH Industrial’s Venezuelan operations effective Dec. 31, 2017; a non-cash tax charge of $123 million due to the U.S. Tax Cuts and Jobs Act (the “U.S. Act”) and tax legislation changes in the UK and certain other countries enacted in the fourth quarter of 2017.
Net sales of farm machinery increased 10% for the full year 2017 compared to 2016 (up 8% on a constant currency basis). In LATAM, the increase was mainly due to higher industry volume, market share gains, a favorable mix of higher horsepower products and net price realization. Net sales increased in APAC mainly driven by favorable volume in Australia, Russia and South East Asia. In EMEA, net sales increased due to higher industry volume, a favorable product mix and net price realization.
In NAFTA, net sales decreased as a result of de-stocking actions in our dealer network, primarily with the high horsepower tractors and the hay and forage product lines. NAFTA industry volumes were flat overall, with the row-crop sector higher, offset by lower livestock sector volumes. In the fourth quarter of 2017, Agricultural Equipment’s net sales increased 15% compared to the fourth quarter of 2016 (up 11% on a constant currency basis). Net sales increased in EMEA, primarily driven by higher combine sales in preparation of the 2018 season and positive price realization. Net sales also increased in APAC and in LATAM. In NAFTA, net sales were flat.
Full year 2017 operating profit was $949 million, a 16% increase compared to $818 million in 2016, mainly due to the favorable volume and product mix in all regions except NAFTA. One percent net price realization more than offset increases in raw material cost and unfavorable foreign exchange fluctuations. Agricultural Equipment also increased spending in research and development, primarily related to our new precision farming solutions, and in selling, general and administrative expenses, primarily associated with the increased sales activity.
Operating margin increased 0.4 p.p. to 8.5%. In the fourth quarter of 2017, operating profit was $279 million ($272 million in the fourth quarter of 2016), with an operating margin of 8.6% (operating margin of 9.6% in the fourth quarter of 2016). Favorable volume, net price realization and lower warranty costs were partially offset by an unfavorable product mix, higher manufacturing costs in EMEA as a result of the transition to new regulatory requirements and an overall increase in research and development spending.
Worldwide demand for agricultural equipment is expected to improve with all regions flat to up 5% on average. Farm incomes are expected to remain stable, leading to no significant changes in planted acreage.
As a result of the forecasted improvement in product demand conditions, and the positive impact of changes in the Company’s capital structure, the Company is setting its full year 2018 guidance for net sales of industrial products of $27-$28 billion.
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