Farm machinery giant CNH Global heralded an upgrade to its profits hopes after returning further into the black than investors had expected in the April-to-June period, helped by propitious plant planning.

Shares in the maker of Case and New Holland equipment rose 4% in early deals in New York.

The Fiat-controlled company said that it was "probable, in view of the group's performance to date and current forecasts for trading activity", that it would lift full-year guidance in its next results announcement, due in October.

The group in April forecast a 5% rise to $13.4bn in equipment revenues in 2010, and operating profit margins widening to 7.1-7.9% from last year's 2.9%.

The forecast came as the group reported second quarter earnings of $144m, compared with an after-tax loss of $67m a year before.

The profit, equivalent to $0.59 a share on an underlying basis, was bigger than the $0.41 a share that Wall Street analysts had expected.

Geographic split

The improvement reflected a rise of 11.2%, to $4.2bn, in revenues, led by the company's smaller construction division, with the farm equipment unit posting a 4.5% rise.

Nonetheless, the group outpaced the world market, where sales fell 4% by volume, with CNH attributing its outperformance to "favourable geographic distribution" of revenues.

The industry saw strongest growth in developing markets such as Latin America, which saw combine and tractor sales soar some 40%, where CNH has been beefing up its presence.

"Prior period capacity expansions contributed to CNH's ability to meet market demand, especially in Brazil, with the group's Sorocaba and Curitiba facilities," the company said.

Softer prospects

The most difficult markets were Europe, the former Soviet Union and Australia, CNH said, flagging a 35% slump in industry sales of combines in Western Europe.

And CNH forecast this region to remain tricky, with tractor sales across the industry set to fall by 10-15% during 2010, and combine sales by up to 30%.

Indeed, the group ditched hopes of potential growth in the world farm machinery market, saying it would be flat during the year.

CNH shares stood $1.61 higher at $29.81 in late deals in New York.