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CNH shares hit three-year high, after ag drives profits beat

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Shares in CNH Industrial hit a three-year high after the maker of Case and New Holland machinery unveiled estimate-beating results and forecast a “strong 2021”, backed by expectations of North American ag market growth.

 

CNH Industrial, which is headquartered in the UK but listed in Milan, revealed a 44% gain to $164m in earnings for the October-to-December period, on revenues up 10.5% at $8.50bn.

 

Adjusted operating profits at its industrial activities - which include Iveco trucks and Heuliez buses, besides an ag division which also includes the Steyr marque – soared 73% to $520m, trouncing market expectations of a $352m figure.

 

The improvement was led by the agriculture division, which raised adjusted operating profits by 61% to $379m, on sales up 17.0% at 3.43bn.

 

‘Demand up’

“Demand was up in most regions,” CNH said, although noting particular growth in its sale in Europe, up 30% year on year, and in its “rest of the world” division, which covers the likes of Australia and Asia, and saw 39% growth.

 

A “significant increase in demand for tractors was noted in the ‘rest of the world’” market, the group said, while noting expansion in the European combine and North and South American tractor markets too.

 

The demand proved strong enough to see CNH push through price increases, while maintaining a rise in sales volumes too, with ag margins also helped by a cost-cutting drive.

 

Swelling order book

And, for 2021, the group forecast particularly strong growth in the North American market, where expansion by volume will top 10% for both combines and large tractors.

 

Europe’s combined market was also seen as enjoying notable growth this year, of 5-10%.

 

CNH Industrial, which reported “double-digit, year-over-year” growth in both its combine and tractor order books, forecast the gains helping drive group net sales up 8-12% this year, from the $24.29bn reported for 2020.

 

Investors have forecast more modest growth of 3.0% to 26.81bn in the group’s 2021 revenues, a figure which also includes takings from finance operations.

 

‘Ready to perform’

Scott Wine, who joined CNH as chief executive last month, from snowmobile-to-motorcycle group Polaris, said that the group was “poised to deliver a strong 2021.

 

“We are ready to perform, our dealer network is healthy and hungry, and in most segments our customers are displaying solid demand,” he said, adding that he was “pleased with the state of the business and the strength of the industry”.

 

Suzanne Heywood, the CNH chair, said that “we enter 2021 prepared to unlock our abundant potential, enhance our commitment to our customers, and forge an increasingly profitable future”.

 

CNH shares touched E11.755 in early deals, their highest since February 2018, before easing back to E11.53, up 2.3% on the day.

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