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)

 

The key consolidated figures of CNH Industrial for the first 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 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 expense, interest expenses and certain other operating expenses.
(2) Adjusted Net income (loss) is defined as net income (loss), less restructuring charges and exceptional items, after tax.

Revenues

Revenues of the CNH Industrial Group in the first half of 2016 are $5,372 million, down 9.9% compared to the first quarter of 2015 (-5.7% on a constant currency basis). Net sales of Industrial Activities are $5,076 million, down 9.8% from the first quarter of 2015 (-5.7% on a constant currency basis).

Agricultural Equipment’s net sales decreased (-13.6% on a constant currency basis), as a result of unfavorable industry volume and product mix in the row crop sector in NAFTA and the Brazilian market in LATAM, partially compensated by increases in net sales in EMEA and APAC.

Construction Equipment’s decrease in net sales (-8.1% on a constant currency basis) in the first quarter of 2016 compared to the same period of 2015 is due to negative volume and mix primarily in NAFTA and LATAM.

Commercial Vehiclesnet sales increased (+5.3% on a constant currency basis) in the first quarter of 2016 compared to the same period of 2015, primarily as a result of favorable volume in EMEA, while in LATAM sales decreased 52.6% due to lower industry volumes in Brazil and Argentina.

Powertrains net sales increased slightly in the first quarter 2016 compared to the same period of 2015, while Financial Services’ revenues are flat.

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Operating profit

Operating profit in the first quarter of 2016 is $232 million, with an operating margin of 4.3% compared to 4.8% in the first quarter of 2015. Operating profit of Industrial Activities is $178 million, a $45 million decrease compared to the same period of 2015, with an operating margin of 3.5%, down 0.5 p.p. compared to the first quarter of 2015.

The reduction of operating profit in Agricultural Equipment is due to unfavorable volume, industrial absorption and product mix in NAFTA and LATAM, partially offset by disciplined pricing and lower material costs. Construction Equipment closed the first quarter of 2016 with an operating margin of 2.6% and higher operating profit as a result of improved margins in NAFTA and APAC more than offsetting the negative effects of challenging trading conditions in LATAM.

The significant increase in Commercial Vehicles (+$37 million) is due to improved volume and mix, positive pricing across all regions and lower product costs.

The improvement of operating profit in Powertrain is due to a positive product mix and industrial efficiencies.

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Adjusted net income

As previously announced, in the first quarter of 2016 an exceptional non-tax deductible charge of $502 million was recorded relating to the investigation of Iveco S.p.A. and its competitors by the European Commission for certain alleged anticompetitive practices and related matters.

Net (loss) income for the period

In the first quarter of 2016, given the losses in certain jurisdictions and the inability to book the related tax benefits, the effective tax rate is higher than the long-term effective tax rate objective of between 34% and 36%.

Net debt

Net industrial debt of $2,470 million at March 31, 2016 is $892 million higher than the $1,578 million at December 31, 2015. Net industrial cash flow is a net outflow of $622 million, an improvement of $375 million compared to the corresponding period of 2015. Capital expenditures total $80 million and currency translation differences are a negative $263 million.

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(1) Some amounts have been recast to conform to the current presentation of debt issuance costs in the balance sheet following the adoption of a new guidance effective January 1, 2016.
(2) Inclusive of adjustments to fair value hedges.

Reconciliation with IFRS data presented in the interim consolidated financial statements in shortened form

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(1) Of which -$529 million is attributable to owners of the parent (+$28 million in the first quarter of 2015).

Significant events in the first quarter of 2016 and subsequent events

In January 2016 CNH Industrial, after authorization by the annual general meeting of the shareholders on April 15, 2015, announced a buyback program to repurchase up to $300 million in common shares, subject to market and business conditions. The buyback program will be financed from the CNH Industrial Group’s liquidity.

In February 2016 the Venezuelan government devalued its currency and changed its official and most preferential exchange rate to the CENCOEX rate, which will continue to be used for purchases of certain essential goods, from 6.3 Bs.F. to 10 Bs.F. per U.S. dollar. Venezuela reduced its three-tier system of exchange rates by eliminating the SICAD rate which last sold U.S. dollars for 13.5 Bs.F. The SIMADI exchange rate, initially fixed at 198.7 Bs.F, was allowed to float freely beginning at a rate of 202.9 Bs.F to the U.S. dollar.

CNH Industrial is currently in the process of assessing the potential impact, if any, that this change to the Venezuelan exchange rate mechanism may have on its business, financial position, cash flows and/or results of operations in future periods.

On March 24, 2016 CNH Industrial communicated that, subsequent to the publication of the 2015 consolidated financial statements on March 4, 2016, developments arose relating to an investigation since 2011 conducted by the European Commission on the subsidiary Iveco S.p.A. and on some of its competitors in relation to certain alleged anticompetitive practices in the European Union.

Based on this CNH Industrial has decided to record a charge related to the matters under investigation of approximately $500 million (€450 million) in the first quarter of 2016. This charge will be taken into account as an exceptional item and is expected not to be tax deductible.

Commercial Register No.64236277 Legal notes | Credits