CNHI reported net sales of Industrial Activities of $5,396 million in its third quarter 2022 earnings report, up 24.4% mainly due to favorable price realization, despite more than 5% adverse currency conversion impacts.
Adjusted EBIT of Industrial Activities was $670 million ($420 million in Q3 2021), with both segments up year over year. Agriculture adjusted EBIT margin was at record 14.8% and Construction was at 2.7%.
The company reported net income of $559 million, with diluted earnings per share of $0.41 (net income of $460 million in Q3 2021, with diluted earnings per share of $0.34). Adjusted net income came in at $557 million, with adjusted diluted earnings per share of $0.41 (adjusted net income of $463 million in Q3 2021, with adjusted diluted earnings per share of $0.34).
Gross profit margin of Industrial Activities was 23%, (20.4% in Q3 2021) with improvement in Agriculture and Construction despite continued cost pressures.
Manufacturing inventories remain at high levels, although reduced from June 2022, amid supply chain constraints, and finished goods inventories continue being lean relative to sales. Total Debt of $20.9 billion at September 30, 2022 ($20.9 billion at Dec. 31, 2021).
Beginning with the reporting of third quarter 2022 financial results, the Company intends to voluntarily report its financial results under the periodic reporting forms for U.S. domestic filers (i.e., CNH Industrial will now voluntarily file annual and quarterly reports on Forms 10-K and 10-Q). Management determined that following the spin-off of the Iveco Group and the refocus as an agricultural and construction equipment leader with significant presence in the US, reporting according to the standards for US public companies is more consistent with the Company’s operating profile and its investor base.
In North America, industry volume was up 9% year over year for the third quarter for tractors over 140 horsepower and was down 16% for tractors under 140 horsepower; combines were up 13%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 5% and 30%, respectively; combine demand in Europe alone was up 12%. South America tractor demand was up 12% and combine demand was up 20%. Asia Pacific tractor demand was up 8% and combine demand was up 12%.
Net sales were up 26%, due to favorable price realization and better mix, mostly driven by North America and South America, partially offset by the negative impact of foreign exchange rates.
Gross profit margin was at record 25%, with Gross Profit $340 million higher than in Q3 2021, mainly due to better mix and favorable price realization primarily in North America, South America and Asia Pacific regions, partially offset by higher production and raw material costs across all regions.
Adjusted EBIT was $666 million ($415 million for Q3 2021), with Adjusted EBIT margin at 14.8%. The $251 million increase was driven by favorable price realization and better mix , partially offset by higher SG&A costs, higher production and raw material costs, and increased R&D spend.
Order book in Agriculture was down less than 10% year over year for tractors. Order book for combines was down 21%, with declines in North America and South America offset partially by growth in EMEA. At above 2.5 times the pre-pandemic levels, order books remain strong in all regions and key products and orders are being kept curtailed as the medium-term cost scenario remains unclear.