CNH Global earns full-year operating profit of $373 million for equipment operations. The company expects it agriculture markets to decline approximately 5%-10% in 2010.
CNH Global N.V. today announced that net sales declined 26% to $12,783 million for the full year as the industry faced a global slowdown. In the face of this decline, the company put in place tight cost controls that delivered an operating profit of $373 million from Equipment operations for the full year, which was down 75% from the same period in 2008. The volume decline combined with the drive to reduce inventories were the primary factors in the decrease in operating profit from equipment operations.
Equipment operations generated $1.1 billion in cash from operating activities over the year. CNH exceeded its working capital reduction target for the full year, delivering $1.2 billion in cash flows through strict management of working capital, centered around a $1.4 billion reduction of inventory. CNH equipment operations improved its net cash position by $953 million, ending the year with a net cash position of $530 million, compared to a net debt position of $423 million at the same time a year earlier.
"In the face of the global economic slowdown, we set a clear target focusing on cash flow. We put in place clear action plans, and today's results clearly demonstrate disciplined execution of those plans," said Harold Boyanovsky, CNH president and CEO. "As we begin 2010, we will continue our focus on working capital management and tight cost controls to ensure we can take full advantage of the economic recovery, when it comes, to rebuild our profit margin and retain our ability to generate cash."
The net loss attributable to CNH was $190 million in 2009 compared with net income of $825 million in
2008. These results include after tax restructuring charges of $75 million compared to $28 million in 2008.
CNH's 2010 outlook is for global agriculture markets to decline approximately 5%-10%. CNH's outlook also calls for construction equipment markets globally to increase approximately 5%-10% during 2010.
Agricultural equipment’s net sales declined by 11% in the fourth quarter compared with the same period a year earlier and 17% for the full year compared with 2008. The primary driver for the decrease was lower volumes in all regions which outweighed positive pricing and foreign exchange impacts. For the full year, worldwide agricultural industry unit sales declined 7% compared to the record year of 2008. Combines were down 19% and tractors down 7% as the global economy slowed and global credit conditions generally tightened.
CNH market share for combines in the fourth quarter was up in every region except Rest of World. For the full year, in the global market for combine harvesters, CNH share increased in Latin America, was stable in Rest of World and in Western Europe and decreased in North America (with gains in the higher end segment).
In the fourth quarter, market share for CNH tractors was flat in every region except Latin America. In the over 40-HP tractor segment in North America, however, CNH outperformed the market and gained market share. For the full year, North America, Western Europe and Latin America were flat, while the Rest of World was down.