CNH Industrial reported strong results for the fourth quarter of 2020, with consolidated revenues of $8.5 billion (up 10%) and adjusted EBIT of Industrial Activities of $520 million (up 73%). Net income was $187 million and adjusted net income was $432 million. Positive free cash flow of Industrial Activities came in at $2.4 billion and Industrial Activities net cash was $0.8 billion as of Dec. 31, 2020.
“CNH Industrial delivered solid results in the fourth quarter, ending 2020 with year-over-year profitability improvements across all industrial segments," says Suzanne Heywood, Chair. "Our year-end Industrial Activities net financial position of $0.8 billion was positive for the first time in the company’s history and testifies to the efficacy of our cost containment and cash preservation actions which, together with strong working capital reductions, drove positive free cash flow of $2.4 billion in the fourth quarter and $1.9 billion for the full year."
Net sales of Industrial Activities were up 12% due to higher volumes and favorable price realization, mainly in Agriculture and Commercial and Specialty Vehicles. Adjusted EBIT of Industrial Activities increased $219 million, with stronger performance from all segments compared to the fourth quarter of 2019. Agriculture adjusted EBIT margin above 11%, C&SV at 3.3%.
Agriculture equipment demand was up in most regions. In North America, tractor demand was up 27% for tractors under 140 horsepower, and up 17% for tractors over 140 horsepower; combines were down 1%. In Europe, tractor and combine markets were up 7% and 22%, respectively. South America tractor markets were up 29% and combine markets were up 22%. Significant increase in demand for tractors was also noted in Rest of World while demand for combines was flat
Agriculture segment net sales were up 17%, mainly due to favorable price realization in all regions and higher volumes in Europe, South America and Rest of World. Adjusted EBIT in the agriculture segment increased $143 million, with Adjusted EBIT margin at 11%, driven by positive price realization, higher volumes and continued reduction of selling, general and administrative expenses.
Results for the Full Year
For the full year 2020, CNH Industrial reported revenues of $26 billion and adjusted net income of $437 million as a result of a solid performance in the second-half of the year, partially offsetting severe adverse COVID-19 impacts in the first-half. Record positive free cash flow of Industrial Activities of $1,926 million was reported in 2020, thanks to the strong operating performance in the second half of the year and continued cash preservation measures, more than offsetting the negative cash flow in the first half of 2020.
Net sales of Industrial Activities were down 7% due to adverse COVID-19 impact on end markets in the first-half of the year, and actions to lower channel inventory levels. Adjusted EBIT of Industrial Activities was $552 million, significantly impacted by industry demand disruption and negative absorption caused by plant shutdowns in the first-half of the year, partially offset by cost containment actions and recovering performances across all segments in the fourth quarter. Adjusted net income was $437 million after excluding certain items from the $438 million reported net loss
The COVID-19 pandemic continues to impact the global economy. The Company’s 2021 outlook assumes a progressive improvement in economic conditions as populations and markets adjust to the new circumstances. The Company is providing the following 2021 outlook for its Industrial Activities:
- Net sales(*) up between 8% and 12% year on year including currency translation effects
- Free cash flow positive between $0.4 billion and $0.8 billion
- R&D expenses growing to 4.5% of net sales, SG&A expenses lower/equal to 7.5% of net sales, and capital expenditures above 2.5% of net sales.