CNH Industrial shares tumbled after the maker of Case tractors
and Iveco trucks cautioned of weaker market conditions for its agriculture
division, which has proved the group's strongest business.
CNH Industrial - in its first full-year results statement
since being formed from a merger of CNH Group and Fiat Industrial – unveiled a
9.0% rise to E170m in earnings for the October-to-December period, despite a
1.1% slide to E6.93bn in revenues.
The increase in profits reflected in part lower foreign
exchange expenses, but also a rise of 12.9% to E298m in trading profits in the
agricultural and construction equipment division which offset a steep decline
in takings from the trucks business.
And even within the agricultural and construction equipment division,
it was the farm machinery unit which fared better, helped by a "strong
performance, particularly in Latin America".
Latin America has proven one of the stronger markets, seeing
industry growth of some 5% year on year in the last quarter of 2013, ahead of
flat European and North American markets.
However, CNH Industrial forecast a weaker 2014 for farm
machinery, highlighted a "projected decline in unit demand of agricultural product
equipment forecasted for 2014".
The comments reflect the latest in a series of downbeat
comment on prospects for the agricultural machinery sector, with a survey by
Creighton University showed a decline already in train in the US industry,
while a survey by Farm Journal Pulse showed US farmers unwilling to buy.
Of more than 1,500 US farmers surveyed, nearly 40% said that
they would not buy any farm machinery this year, with a further 25% expecting
to purchase only one piece, in face of weakening crop prices.
US net farm income it poised to drop to a four-year low of $101.5bn
this year, according to IHS Global Insight, down $16bn from the analysis group's
estimate for proceeds in 2013, and $29.5bn below the US Department of
Agriculture figure for last year.
CNH forecast revenue growth of at best 5% this year, and
potentially none at all, with trading margin seen at 7.8%-8.2%, compared with 7.7%
The forecasts disappointed investors, who sent CNH shares
down more than 5% in Milan at one point before the stock recovered some ground
to close at E7.94, down 3.4% on the day.