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Tractor profits send CNH shares soaring

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Shares in CNH Industrial, the maker of Case and New Holland Tractors, rallied after the company reported strong profits from its agricultural segment, helping results beat expectations.

Sales across the group are down year on year, but profit margins are rapidly improving including after a company wide restructure.

"Our ability to increase operating profit in the agricultural equipment segment and our trend of improved results in Commercial Vehicles solidify our belief that the benefits of our efficiency plan on product cost and quality are taking hold," CNH said.

Rising profits from ag segment

The group's agricultural equipment business saw net sales fall by 7.5% over the three months to June 30, compared to the same time last year, to $2.8bn.

CNH cited overall lower volumes, and a less profitable product mix in North America.

But profits in the segment were up 14% year on year, at $301m.

"The increase was primarily due to positive pricing and cost containment actions, including material cost reductions, and favourable foreign exchange impact," CNH said.

Cane harvest demand rises

Sales in the Asia-Pacific region were up, thanks to the higher volumes in Australia.

In South America, demand for tractors was down, but sales of sugar cane harvesters were up.

Brazilian sugar harvesting has been heavy this year, thanks to higher prices and an abundance of cane left over from the previous marketing year.

Results beat expectations

Across the whole group CNH reported revenues from industrial activities at $6.7bn, down 2.9% year on year, over the three months to June 30.

This was some 100m above analyst expectations.

Revenue was down in the company's construction business, but sales of commercial vehicles and powertrain equipment rose year on year.

And operating profits rose by 13% year on year, to $435m, thanks to wider profit margins, beating expectations of $336m.

CNH shares were up 7.7% in afternoon deals in Milan, at $6.40 a share.

By Agrimoney.com

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