CNH Industrial (26.92% stake, 39.94% of voting rights on issued capital. FCA also holds a 1.17% stake, 1.74% of voting rights)

 

Key consolidated figures of CNH Industrial in the first half of 2016 and in the second quarter of 2016 (drawn up in accordance with US GAAP) are as follows:

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(1) Operating profit is a non-GAAP financial measure used to measure performance. Operating profit of Industrial Activities is defined as revenues from net sales less cost of goods sold, selling general and administrative expenses and research and development expenses. Operating profit of Financial Services is defined as revenues less selling, general and administrative expenses, interest expenses and certain other operating expenses.
(2) Adjusted net income is defined as net income (loss) less restructuring costs and other unusual income/(expenses), after tax.

Revenues

Revenues recorded in the second quarter of 2016 by the CNH Industrial Group were $6,753 million, down 2.9% compared to the second quarter of 2015. Revenues from net sales of Industrial Activities were $6,450 million in the second quarter of 2016, a 2.8% decrease compared to the same period of the prior year.

In particular, the decrease in net sales of Agricultural Equipment (-6.3% on a constant currency basis) is due to lower industry volumes, and unfavorable product mix in the row crop sector in NAFTA.

Construction Equipment’s decrease in net sales (-18.4% on a constant currency basis) is attributable to negative industry volumes primarily in the heavy product class in all regions.

Net sales of Commercial Vehicles are up 6% on a constant currency basis, primarily as a result of positive volume trends in EMEA, whereas in LATAM net sales decreased due to lower industry volumes in Brazil and Argentina.

On a constant currency basis, the 7% increase of Powertrain compared to the second quarter of 2015 is due to higher sales volumes.

Financial Services decreased by 5.7% (3.4% on a constant currency basis) due to a lower average portfolio, a reduction in interest spreads and the negative impact of currency translation.

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Operating profit

Operating profitin the second quarter of 2016 was $488 million, a $21 million increase compared to the second quarter of 2015. The operating margin increased to 7.2% compared to 6.7% in the first quarter of 2015.

Considering the first half of 2016, operating profit is down $31 million compared to the first half of 2015 and the operating margin is flat (5.9% in the first half of 2016 compared to 5.8% in the first half of 2015).

Operating profit of Industrial Activities in the second quarter of 2016 was $453 million, a $52 million increase compared to the second quarter of 2015, with an operating margin of 7%, up 1% compared to the corresponding period of the prior year.

The increase in the operating profit of Agricultural Equipment was primarily due to positive pricing, cost containment actions and favorable foreign exchange impact.

Operating profit of Commercial Vehicles improved primarily as a result of positive pricing, material cost reductions and manufacturing efficiencies in EMEA offsetting the difficult trading conditions in LATAM, and reduced activity levels in the specialty vehicle business.

In the second quarter of 2016 the operating margin of Construction Equipment decreased 1.8 p.p. to 2.9%, as a result of lower volumes in NAFTA and negative industrial absorption partially offset by lower product cost and other cost containment actions.

Operating profit of Powertrain increased compared to the second quarter of 2015 owing to higher sales volumes, improved product mix and manufacturing efficiencies.

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Adjusted net income

In the first half of 2016 an exceptional non-tax deductible charge was recorded of $551 million (of which $49 million in the second quarter of 2016) following the final settlement reached with the European Commission on the truck competition investigation.

Net debt

Net debt of Industrial Activities at June 30, 2016 is $2,135 million compared to $1,578 million at December 31, 2015. Net industrial cash flow was a negative $20 million (a positive $602 million in the second quarter of 2016), considering working capital absorption in the first six months of $484 million and capital expenditures of $172 million. Net debt reflects the payment of dividends and the purchase of treasury stock of approximately $218 million and currency translation differences of approximately $319 million.

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(1)   Certain amounts have been recast to conform to the current presentation of debt issuance costs following the adoption of a new guidance, effective January 1, 2016.

Reconciliation with the IFRS data presented in the half-year condensed consolidated financial statements

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Significant events in the second quarter of 2016 and subsequent events

On May 10, 2016 CNH Industrial N.V. announced plans to issue 2.875% notes in the principal amount of €500 million due May 2023 with an issue price of 99.221% of the principal amount.

On August 4, 2016 CNH Industrial announced a cash tender offer for up to $450 million of guaranteed senior notes due 2017 issued by its subsidiary Case New Holland Industrial Inc.

The early results of the cash tender offer updated to August 17, 2016 show a principal amount tendered of $830,459, which is higher than the maximum tender amount of $450 million. Consequently, the notes will be purchased subject to proration, with an expected proration factor of 0.54225125. Notes not accepted for purchase will be promptly returned or credited to the holder's account. Notes purchased will be cancelled. The settlement date is expected to occur on August 22, 2016. The consideration to be paid will be $1,080.84 for every $1,000 of principal amount plus interest accrued and not yet paid at the settlement date.

On August 4, 2006 CNH Industrial announced that it had priced $600 million in aggregate principal amount of 4.50% notes due 2023, issued at an issue price of 100%. The completion of the offering was announced on August 18, 2016. The net proceeds of the offering were approximately $593 million after payment of offering and related expenses. The net proceeds from the offering will be used for working capital and other general corporate purposes, which may include repurchase of a portion of the outstanding 7.875% Notes due 2017 issued by the subsidiary Case New Holland Industrial Inc.

Commercial Register No.64236277 Legal notes | Credits