CNH Global pledged huge improvements in profit margins, and a sharper focus in emerging markets, as the tractor maker revealed plans aimed at taking earnings far ahead of investors' hopes by 2014.

The owner of Case and New Holland brands placed margin misses as a key disappointment of the group's last strategic plan - named Lingotto after the Italian headquarters of controlling shareholder Fiat.

CNH also admitted it "did not achieve cost competitiveness" in the market for smaller tractors, and had maintained too complex an array of products.

However, the group placed achieving margins of up to 11.5% - a company best - at the centre of a four-prong strategy which will also beef up the group's presence in China, India and Russia, and raise Latin American revenues by 65%.

The group will also ensure a steady stream of product improvements, notably in large combines, a market set to be supported by farmers' quest for "higher productivity".

Efficiency drive 

The strategy to raise operating profit margins from last year's 2.9% played to CNH's focus on efficiency forced by the global economic downturn, a person familiar with the company's thinking told Agrimoney.com.

CNH cut 11% of its workforce last year, as part of a cost-cutting drive chief executive Harold Boyanovsky credited for first quarter results which were also announced on Thursday, and revealed a more convincing return to the black than Wall Street had expected.

The group also ditched a warning that the world agricultural equipment market would shrink by 5-10% this year, saying it would, at worst, prove flat.

Promises vs reality 

However, CNH's strategy, unveiled at a Fiat investor day in Turin, received a mixed response from investors, even though it appeared to put the company on course for earnings per share of $5.00 by 2014.

The margins CNH is targeting in four year's time "would be 2.5 percentage points higher than the combined Case and New Holland company has ever produced", International Strategy and Investment Group said.

"Given CNH's now 10-plus year history of more promises of restructuring benefits than actual results, it looks like a bit of a leap of faith for an investor to believe an approximately 11% 2014 margin."

CNH shares closed 2.3% lower at $31.34 in New York.