Europe is set to lead the world farm equipment market into a second successive year of decline, with the decline in combine sales in the region to accelerate, the maker of Case and New Holland tractors said.

Western Europe, whose farm equipment market "remains slow on economy concerns", will see drops of 5-10% in tractor sales next year and of 15-20% in combine volumes, CNH Group said.

The declines, following a year in which the region's combine sales fell 12%, will wipe out the benefit to the trade of improved volumes in Latin America, where demand is being buoyed by crop prices which, on historical comparisons, remain firm.

The important North American tractor market will decline by 5-10% over the year, in line with the global average, with combine volumes sliding 10-15%.

North American demand was "softening as we pass peak farm income", CNH said, highlighting the slump in US farm income from approaching $90bn two years ago to $57.0bn in 2009.

Into the red 

However, while CNH forecast "improved operating results" in 2010, it declined to make detailed forecasts for its own performance, flagging a "lack of visibility" in global economic conditions.

The assertions followed a year in which CNH swung to an after-tax loss of $190m from earnings of $825m a year before, on sales down 26% at 12.8bn.

"The volume decline combined with the diver to reduce inventories were the primary factors in the increased in [profits]," the group said.

'Disciplined execution'

However, the results beat the expectations of investors who had expected CNH barely to breakeven in the last three months of 2009.

"In the face of the global economic slowdown, we set a clear target focusing on cash flow," Mr Boyanovsky said.

"We put in place clear action plans, and today's results clearly demonstrate disciplined execution of those plans."

CNH shares closed up 2.8% at $26.20 in New York.