CNH INDUSTRIAL

(27.07% stake, 40.11% of the voting rights on issued capital.

In addition, FCA holds a 1.18% stake, 1.74% of the voting rights)

 

The key consolidated figures of CNH Industrial for the year 2014 (drawn up in accordance with IFRS) are as follows:

  Year  
$ million
2014 2013(1)
  Change
Net revenues
32,957 3,.231 (1,274)
Trading profit
2,399 2,637 (238)
Operating profit
2,167 2,481 (314)
Profit for the year
916 1,218 (302)
Profit attributable to owners of the parent
917 1,048 (131)
  At
$ million 12/31/2014
12/31/2013 (1)
Total assets 54,441 56,462
Net debt (23,590) (23,290)
- of which: Net industrial debt (2,874) (2,195)
Equity attributable to owners of the parent 7,534 7,591
(1) Amounts recast in order to reflect the change in presentation currency from euro to U.S. dollar.
 

Net revenues

The CNH Industrial Group reported net revenues of $32,957 million for 2014, a 3.7% decrease compared to 2013 (down 2.0% on a constant currency basis). Net revenues of Industrial Activities were $31,408 million in 2014, a 4.4% decrease compared to the prior year (down 2.7% on a constant currency basis) with revenue growth for Construction Equipment and Powertrain more than offset by a decline in Agricultural Equipment, due to lower volumes and unfavorable product mix primarily in LATAM and NAFTA and Commercial Vehicles in LATAM, as well as by the negative impact of currency translation, primarily relating to the Brazilian real. Financial Services recorded net revenues of $2,086 million in 2014, an increase of 7.0% compared to 2013, principally due to the higher average portfolio value.

  Year Change
$ million 2014 2013 (1) %
Agricultural Equipment 15,204 16,763 -9.3
Construction Equipment 3,346 3,258 2.7
Commercial Vehicles 11,087 11,447 -3.1
Powertrain 4,475 4,423 1.2
Eliminations and other (2,704) (3,050) -
Total Industrial Activities 31,408 32,841 -4.4
Financial Services 2,086 1,950 7.0
Eliminations and other (537) (560) -
Net revenues 32,957 34,231 -3.7
(1) Amounts recast in order to reflect the change in presentation currency from euro to U.S. dollar.

Trading profit

Group trading profit was $2,399 million, or 7.3% of net revenues, in 2014. Trading profit decreased of $238 million compared to a trading profit of $2,637 million, or 7.7% of net revenues, in 2013. Trading profit of Industrial Activities was $1,867 million, a decrease of $252 million compared to prior year, with an operating margin of 5.9%, down 0.6 percentage points compared to 2013. Trading profit increases in Construction Equipment and Powertrain were more than offset by declines in Agricultural Equipment and Commercial Vehicles. Construction Equipment benefitted from favorable volume and mix in all regions, positive price realization, and cost efficiencies. For Powertrain, the improvement was mainly due to the increase in sales, primarily with third parties, and continued industrial cost efficiencies partially offset by an increase in research and development costs. For Commercial Vehicles, positive performance in EMEA and APAC and significant reductions in selling, general and administrative (“SG&A”) costs were more than offset by the negative effects of challenging trading conditions in LATAM, due to a significant decline in market demand. For Agricultural Equipment, lower volume and negative product mix were partially offset by positive net price realization, industrial efficiencies and structural cost reductions in SG&A costs and research and development expenses. Foreign exchange translation impacts were not material to the operating profit of Industrial Activities. Trading profit for Financial Services totaled $532 million, an increase of 2.7% compared to 2013.

  Year  
$ million 2014 2013(1) Change
Agricultural Equipment 1,689 1,949 (260)
Construction Equipment 66 (109) 175
Commercial Vehicles 2 145 (143)
Powertrain 220 210 10
Eliminations and other (110) (76) (34)
Total Industrial Activities 1,867 2,119 (252)
Financial Services 532 518 14
Eliminations and other - - -
Trading profit 2,399 2,637 (238)
(1) Amounts recast in order to reflect the change in presentation currency from euro to U.S. dollar.

Operating profit

Gains/(losses) on the disposal of investments amount to zero in 2014. In 2013, this item amounted to $25 million, in connection with the sale of the investment in Kobelco Construction Machinery Co., which took place in 2012, following an adverse ruling issued by the arbitrator on the price of the transaction.

In 2014, restructuring costs amounted to $192 million, as part of the Group’s Efficiency Program announced in July 2014. Agricultural Equipment recorded $46 million primarily for the planned closure of a joint venture in China and cost reduction activities as a result of negative demand conditions. Commercial Vehicles recorded $103 million mainly due to actions to reduce SG&A costs and business support costs as a result of the transition to CNH Industrial’s regional structure, and costs related to the completion of manufacturing product specialization programs. Construction Equipment recorded $43 million restructuring costs mainly due to the realignment of the dealer networks in EMEA as a result of the re-positioning of the Case and New Holland brand offerings, and the announced closure of an assembly plant in Calhoun, Georgia, USA.  For 2013, restructuring costs were $54 million, mainly referring to Commercial Vehicles and primarily related to manufacturing product specialization programs.

Other unusual expenses were $40 million in 2014 mainly due to the closure of an indirect taxes claim and costs for the rationalization of strategic suppliers. Other unusual expenses were $77 million in 2013, largely reflecting expenses related to the dissolution of the previous joint venture with Barclays group and its consolidation into Financial Services andcosts for the rationalization of strategic suppliers.

The CNH Industrial Group recorded an operating profit of $2,167 million (or 6.6% of net revenues) in 2014, a decrease of $314 million compared to $2,481 million (or 7.2% of net revenues) recorded for 2013. Operating profit for Industrial Activities was $1,635 million, down $369 million from 2013, with lower trading profit and higher restructuring costs partially offset by lower loss on disposal of investments. Operating profit for Financial Services totaled $532 million, up $55 million over 2013.

Profit for the year

Net financial expenses were $776 million in 2014, compared to $615 million in 2013, and included a pre-tax charge of $71 million due to the re-measurement of Venezuelan assets denominated in bolivars. Excluding this exceptional charge, net financial expenses totaled $705 million, an increase of $90 million over the prior year, mainly deriving from higher average net industrial debt, partially offset by more favorable interest rates.

Result from investments was a net gain of $91 million in 2014 (compared to a net gain of $136 million in 2013). The decrease of $45 million is mainly due to lower earnings from the joint ventures in APAC as a result of more difficult trading conditions.

Income taxes totaled $566 million in 2014 compared to $784 million in 2013, representing an effective tax rate of 38.2% for the year (2013 effective tax rate of 39.2%).

Net debt

At December 31, 2014 consolidated net debt was $23,590 million, an increase of $300 million compared to $23,290 million at the end of 2013.

During 2014, net industrial debt increased $679 million to $2,874 million from $2,195 million at December 31, 2013. Cash generation in the operations before changes in working capital contributed for $1,946 million while changes in working capital negatively impacted by $942 million. Capital expenditures activity totaled $1,681 million and dividend payments, net of capital increases, were $364 million. Currency translation differences positively affected net industrial debt by $555 million.

 At 
$ million 12/31/2014 12/31/13 Change
Debt (29,701) (29,946) 245
- Asset-backed financing (13,587) (14,727) 1,140
- Other debt (16,114) (15,219) (895)
Other financial assets (liabilities) (1) (30) 167 (197)
Cash and cash equivalents 6,141 6,489 (348)
Net debt (23,590) (23,290) (300)
Industrial Activities (2,874) (2,195) (679)
Financial Services (20,716) (21,095) 379
(1) Includes the positive or negative fair value of derivative financial instruments.

Significant events in 2014

On April 28, 2014, CNH Industrial announced that it intended to enter into a new licensing agreement with Sumitomo (S.H.I.) Construction Machinery Co. Ltd, a wholly owned subsidiary of Sumitomo Heavy Industries Ltd.

Under this new technology license and component supply agreement, CNH Industrial will manufacture Sumitomo designed crawler excavators (models ranging from 13 to 35 tons). Start of production of the new localized models is planned for mid-2016.

This agreement also extends the existing Global Product Supply Agreement between CNH Industrial and Sumitomo (S.H.I.) Construction Machinery for the sourcing of excavators manufactured in Sumitomo plants. Since 1992, Sumitomo has been a supplier to the CNH Industrial global distribution network of excavators ranging from 7 to 80 tons.

This next step will further strengthen the partnership between the two companies. 

In June 2014, CNH Industrial announced that it will close its assembly plant in Calhoun, Georgia (USA) in the third quarter of 2015 as part of the business footprint optimization program and in order to achieve the targets of the Business Plan.

In June 2014, CNH Industrial announced a comprehensive efficiency program designed to enhance the efficiency and competitiveness of its Industrial Activities.

The program is expected to result in a total cumulative charge of approximately $280 million over the next three years, with a non-cash impact of approximately 20%. The majority of the restructuring charges are expected to impact the statement of operations in 2014 and 2015. Benefits from this program are expected as early as the second half of 2014, with annualized savings of approximately $160 million by the end of 2016.

Restructuring actions in Agricultural Equipment are mainly related to the closure of a joint venture as the business model is no longer viable in the current environment.

Actions identified by Construction Equipment are related to the re-tooling of its industrial footprint in connection with the recently announced enlargement of the licensing agreements with Sumitomo (S.H.I.) Construction Machinery Co., Ltd, as well as the re-positioning of Case and New Holland brand offerings and the consequent alignment of their dealer networks. The recently announced closure of the assembly plant in Calhoun, Georgia (USA) represents one of those actions.

Commercial Vehicles actions will focus on SG&A expenses and business support costs as a result of the transition to CNH Industrial’s regional structure, as well as on the completion of manufacturing product specialization programs.

In September 2014, CNH Industrial Group announced the definitive agreement to acquire substantially all of the assets of precision spraying equipment manufacturer Miller-St. Nazianz, Inc. (“Miller”). These assets will become part of the New Holland Agriculture brand, providing a strong platform to grow the self-propelled sprayer business on a global scale. The agreement is subject to customary closing conditions, with the goal of closing before the end of the year.

 

 

Commercial Register No.64236277 Legal notes | Credits