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CNH sees tractor sales slump in Brazil and North America

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Machinery maker CNH Industrial reported a sharp fall in profits and revenues at its ag machinery division, as row crop farmers in the America's suspend purchases, particularly of big-ticket items.

Over the first three months of 2016, profits within the ag segment fell by 55.9%, and revenues were down by 17.6% year on year.

"Trading conditions in agricultural equipment continue to remain challenging," said CNH, citing in particular the row crop industry in North America and Latin America.

Falling demand

Sales in CNH's agricultural equipment segment were down 13.6% in the first three months of 2016, compared to the same period last year, when currency effects were discounted.

CNH ascribed the results to falling sales volumes, particularly on the higher-margin products" in North America and Brazil.

The fall in farm purchases also reduced revenues from equipment financing.

But sales in Asia-Pacific rose, thanks to rising volumes in Australia.

Margins to recover

Margins in CNH's agricultural machinery business are expected to recover over the rest of the year, chief executive Rich Tobin told analysts.

"While we continue to navigate challenging trading conditions in the agricultural equipment industry, we are encouraged by the improved operating profits and margins in our other industrial segments compared to last year," Mr Tobin said.

Company net loss

The whole business reported a net loss of $513m over the three months to March 31, compared to a net profit of $23m over the same period last year.

Revenues were down 9.9%, at $5.37bn.

CNH said the company's financial were hit by a one off charge, related to a European Commission investigation of alleged anti-competitive practices at CNH's Iveco subsidiary, an Italian bus manufacturer.

Excluding the charge and restructuring expenses, net profits were reported at $1m, down from $33m a year ago.

CNH shares were up 1.7%, at $6.70, in afternoon deals in Milan.


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