CNH Global, parent company of Case IH, Case Construction and New Holland Agriculture and Construction, reported net profit of $144 million, or 60 cents a share, compared with a loss of $67 million, or 28 cents a share, in the second quarter of 2009. Sales of equipment rose 10.7% to $3.93 billion.
Construction equipment sales led most of this increase, as the segment's sales jumped 44% from last year's second quarter. The company’s second-quarter sales of farm machinery climbed 4.5% from a year ago to $3.14 billion.
Operating income rose 23% to $644 million, as the farm segment's operating margin improved to 10.1% from 8.5% on better factory productivity and a favorable price mix of products sold in the quarter.
CNH forecast global sales of farm equipment this year will be flat compared with 2009. The company predicted tractor sales in Europe will fall 10-15% from 2009, while North American tractor sales are seen as flat to up 5%. Latin American tractor sales are expected to climb 20-25%.
CNH didn't offer formal sales and profit guidance with its second-quarter results, but noted that it will likely offer 2010 guidance after the third quarter. Analysts polled by Thomson Reuters expect the company to earn $1.31 a share for the year on $13.52 billion in revenue.
CNH Global’s parent company, Fiat, which manufactures cars under the Fiat, Alfa Romeo and Lancia brands, as well as trucks (Iveco) and farm equipment (Case and New Holland) reported net revenues were up 12.5% to 14.8 billion euros.
The Turin-based company which controls U.S. carmaker Chrysler, also said its board approved a "demerger" plan to spin off its industrial vehicle and auto businesses into two distinct companies giving birth to a global automotive company that will incorporate Chrysler.
The plan that was first announced in April is expected to be implemented in January 2011, Fiat said.
After the demerger, the two companies will be separately listed on the Milan stock exchange and will operate as independent companies with their own management teams and boards of directors.
CNH Actual & Estimated Quarterly Revenues (U.S. millions $)
12/08 12/09 12/10E 12/11E 12/12E
Revenues 17,366 12,783 13,336 15,092 15,996
EBIT (UBS) 1,487 373 783 1,220 1,379
Net Income 852 (115) 238 416 534
— Ag Equipment Intelligence