SEGMENT RESULTS Agricultural Equipment
6/30/2011 6/30/2010 Change
(US $ in millions, except percentages)
Net Sales of Equipment $3,851 $3,148 22%
Gross Profit $850 $644 32%
Gross Margin 22.1% 20.5% 1.6 pts
Operating Profit $496 $317 56%
Operating Margin 12.9% 10.1% 2.8 pts
Agricultural Equipment Industry and Market Worldwide agricultural industry unit sales increased 13% compared to the second quarter of 2010. Global tractor sales grew 13% while global combine sales grew 17% for the quarter. North American tractor sales were down 3%, with the high horsepower 4WD class up 1%, and combine sales were down 14%, partially offsetting the strong market growth of the first quarter, and maintaining a 7% growth on a year to date basis. Latin America sales of tractors decreased 5% and combine sales increased 58%. EAME & CIS markets improved for the quarter, with tractor and combine sales up 30%. APAC markets were up 15% in tractor sales and flat in combine sales.
CNH Agricultural Equipment Second Quarter Results CNH's net sales in the agricultural equipment sector increased 22% for the quarter (16% on a constant currency basis) as a result of solid trading conditions in every region. Net sales in the EAME & CIS markets continued their positive growth trajectory with comparative reported revenue up 40% on the back of firm demand across all product segments. As a result of this increased unit volume in Europe and the CIS, comparative industrial capacity utilization increased driving positive cost absorption. This benefit coupled with improved price realization and favorable product mix (to larger horsepower tractor and combine segments) resulted in a 2.8 percentage point increase in comparative operating margin to 12.9% for the period.
Second quarter tractor market share performance was in line with the overall market growth as a result of a positive performance in Europe, and in the important over 40 hp segment in North America driven by very good market response to the introduction of high horsepower tractors and combines equipped with the FPT Selective Catalytic Reduction (SCR) Tier 4A/Stage IIIB engines delivering increased power and reduced fuel consumption and overall operating costs compared to equivalent CNH Tier 3 equipment. Combine market share recovered in the second quarter in the North American and EAME & CIS regions. Industrial production and retail sales were closely aligned during the period with resulting company and dealer inventory levels remaining largely unchanged.
In Latin America, New Holland Agriculture launched the new CR6080, the only class 6 combine manufactured in Brazil, equipped with a 300 hp engine, a 9,000 liters grain tank and the segment's largest cab. The brand also introduced the new T8 tractor range, from 273 to 389 hp, the industry's highest horsepower tractors produced in Brazil, focused on cash grain and sugar cane business and equipped with the SideWinder II armrest with fully integrated ergonomic controls for precision farming solutions, as well as the TL Exitus tractor ideal for spraying applications. The New Holland product offering has been expanded by the new SP3500 sprayer. In Europe the brand introduced a new hydraulic Powershuttle transmission on the TD5000 tractor, ideal for loader work and for fast directional changes.
In North America, Case IH began shipments of Tier 4A/Stage IIIB compliant Steiger/Quadrac 550-600 hp series tractors with best-in-class fuel efficiency and hydraulic flow, as well as the Module Express 635 Cotton Picker now equipped with a 400 hp engine. In addition, Case IH sugar cane harvesters were honored with the 'Top of Mind' award by the Brazilian trade publication Revista Rural. In Europe, the Steyr Tractor brand launched the Kompakt S series, while Case IH launched the AFS Pro model 700 monitors in all EfficientPower tractor models.
The Case IH Puma CVX EP and the New Holland T8.390 are two of the finalists for the 'Tractor of the Year 2012' award assigned by a panel of industry magazines representing 20 European countries.