CNH Industrial

(26.96% stake, 39.98% of the voting rights of issued capital.
In addition, FCA holds a 1.17% stake, 1.74% of the voting rights)

The key consolidated figures of CNH Industrial in the first half of 2015 (drawn up in accordance with IFRS) are as follows:

Net revenues

Net revenues of the CNH Industrial Group in the first half of 2015 are $13,127 million, down 21.2% compared to the first half of 2014 (-9.9% on a constant currency basis). Net revenues of Industrial Activities are $12,379 million, down 22.1% compared to the first half of 2014 (-10.7% on a constant currency basis). In particular, the decline for Agricultural Equipment (-31.1%; -23.8% on a constant currency basis) is due to unfavorable industry volume and mix in all regions. The decrease for Construction Equipment (-21.3%; -15.7% on a constant currency basis) is due to negative volume and mix primarily in LATAM, and the reduction for Powertrain (-24.6%; -8.6% on a constant currency basis) is due to lower sales to captive customers. Net of the negative impact of currency translation, net revenues of Commercial Vehicles show a decrease in revenues of 9.5%, but an increase in revenues of 9.1% on a constant currency basis, confirming a positive trend in EMEA driven by higher volume, while revenues in LATAM are down due to a further decline in the Brazilian market. The trend of Financial Services shows a decline of 5% at current exchange rates (an increase of 6.6% on a constant currency basis), due to an increase in the average portfolio and the geographical mix of the portfolio.

Trading profit (loss)

Trading profit in the first half of 2015 is $724 million, down $587 million (-44.8%) compared to the first half of 2014. The trading margin is 2.4% compared to 5.5% in the first half of 2014.
Trading profit of Industrial Activities totals $459 million, down $576 million compared to the first half of 2014, with a trading margin of 3.7%, down 2.8 percentage points compared to the first half of 2014.
The reduction in the trading profit of Agricultural Equipment was driven by negative volume and mix partially offset by purchasing efficiencies and structural cost reductions.
Commercial Vehicles’ trading profit improved due to favorable volume and mix and cost reductions in selling, general and administrative expenses.
Construction Equipment reported lower trading profit in the first half of 2015 compared to the first half of 2014 due to the impact of lower volumes in LATAM and higher research and development costs, only partially offset by cost containment actions.
Trading profit of Financial Services is slightly down from the first half of 2014 due to the impact of currency translation, partially offset by reduced selling, general and administrative expenses

Operating profit (loss)

Restructuring costs in the first half of 2015 amount to $32 million and are primarily attributable to actions in the Agricultural Equipment and Commercial Vehicles as part of the Efficiency Program launched in 2014. Restructuring costs in the first half of 2014 were equal to $65 million and referred mainly to Construction Equipment and Commercial Vehicles.

Profit (loss) for the period

In the first half of 2015 net financial expenses were recorded of $312 million compared to $394 million in the first half of 2014, which included a pre-tax charge of $63 million due to the re-measurement of Venezuelan assets denominated in bolivars following the changes in Venezuela’s exchange rate mechanism. Excluding this exceptional charge, net financial expenses decreased $19 million compared to the first half of 2014, primarily due to more favorable cost of funding and a lower average indebtedness.
With regard to the Venezuelan assets, the SICAD rate was deemed appropriate to use to convert the assets.

Income taxes in the first half of 2015 total $188 million compared to $349 million in the first half of 2014, representing an effective tax rate of 47.6% compared to an effective tax rate of 38.9% in the first half of 2014 which had been impacted by certain discrete tax benefits as a result of the favorable resolution of tax audits. Instead in the first half of 2015 the effective tax rate was negatively impacted by the inability to record deferred tax assets on losses in certain jurisdictions.

Net debt

Net industrial debt at June 30, 2015 increased $179 million to $3,053 million compared to $2,874 million at December 31, 2014. Cash generation in the operations before change in working capital contributed for $578 million. Change in working capital negatively impacted by $495 million, mainly due to increase in inventories. Capital expenditures activity totaled $450 million. Currency translation differences positively affected net industrial debt by $417 million.

Significant events in the first half of 2015 and subsequent events

In April 2015, CNH Industrial announced that, in line with the ongoing global Efficiency Program launched in 2014, certain changes in the geographical location of the operations of its Iveco commercial vehicles will involve the manufacturing facilities in Madrid, Valladolid and Piacenza.

On July 7, 2015 FCA and CNH Industrial renewed the Company-specific Collective Labor Agreement (CCSL) with the trade unions FIM-CISL, UILM-UIL, FISMIC, UGL Metalmeccanici and the Associazione Quadri e Capi Fiat. The agreement applies to all 85,000 employees of the two groups in Italy.
The new 4-year agreement (2015-2018) includes an innovative performance-based compensation scheme linked to the achievement of certain efficiency and profitability targets. If the targets are met, employees will be entitled to a total bonus amount of between €7,000 and €10,700 over four years. This scheme has therefore now been extended to all companies in Italy of the two Groups.