By: Saabira Chaudhuri, MarketWatch
CNH Global N.V.'s third-quarter profit rose 18% as global demand for agricultural equipment remained solid and high commodity prices helped mask the effects of a severe drought in North America.
The company said strong agricultural equipment sales more than offset the reduction in sales of construction equipment due to challenging market conditions in most geographies and the negative effects of foreign currency translation.
CNH, the world's second-largest seller of farm equipment behind Deere & Co. (DE), has seen its top line grow in recent quarters as high prices for commodities give farmers more money to spend on equipment.
Earlier this year, CNH said it had appointed a committee of directors to evaluate an offer from Fiat Industrial SpA to acquire the CNH shares that Fiat doesn't already own. Fiat currently holds about 89% of CNH's stock and has proposed swapping the 11% held by public shareholders for stock in a new company that would include CNH, Iveco commercial trucks and engines. As a part of the deal, Fiat Industrial would relocate its primary stock listing to the U.S.
In August, CNH said it was still taking "a very close look" at the options for its construction-equipment business, although executives didn't elaborate.
CNH reported a profit of $323 million, or $1.34 a share, compared with a profit of $274 million, or $1.14 a share, a year earlier. Net sales climbed 4.8% to $4.83 billion, or 11% on a constant currency basis.
Analysts surveyed by Thomson Reuters expected earnings of $1.17 a share on revenue of $4.57 billion.
Equipment operations gross margin narrowed to 9.6% from 10%.
Sales of agricultural equipment rose 12% to $4 billion, while construction sales slipped 21% to $830 million.
The company affirmed its full-year outlook.
Shares ended Friday at $42.85 and were inactive premarket. The stock is up 19% since the start of the year.