CNH said it was stepping up its drive for efficiency savings as it forecast its first annual loss in six years, thanks to plunging sales in both its farm and construction machinery businesses.

The US-based group, which owns the Case and New Holland brands, said it was "reviewing all options" for making further cost savings, on top of the cuts of 10-12% in temporary staff planned for the year and the construction division shake-up, including a plant closure, announced on Tuesday.

"Additional actions may be undertaken... as CNH seeks to further increase its ability to cost-effectively manufacture quality products," the group, which is 89% owned by Italy's Fiat, said.

The group has earmarked $250m for its efficiency drive, which has thus far freed up $918m in committed cash, on areas such as inventories, and cut agency workers by 7%.

'Markets challenging'

Nonetheless, CNH, which last slipped into the red in 2003, said it was on track to report an underlying loss for 2009.

"Markets will remain challenging through at least the balance of the year," chief executive Harold Boyanovsky, said.

Equipment sales overall will drop 25-30%, worse than a 15-25% range forecast in April.

The global market for larger tractors will shrink by about 10-15% this year, with industry-wide combine sales sliding by 25-30%.

In construction, sales will fall by up to one-half industry-wide.

Second quarter loss

In the April-to-June period, CNH reported a 22% drop to $3.01bn in revenues at its agricultural equipment division, nearly twice the rate of decline in the previous quarter.

Operating profits at the unit slumped by 48% to $255m.

With the construction division sliding into the red, the group reported a loss of $67m compared with a $347m profit a year before.

CNH shares stood $0.29 lower at $15.59 in morning trade in New York.