CNH Industrial (26.92% stake, 39.94% of voting rights on issued capital.

FCA also holds 1.17% of stake, 1.74% of voting rights)

 

 

Key consolidated figures of CNH Industrial for the first nine months of 2016 and the third 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.
(3) Owners of the parent and non-controlling interests.

Revenues

Revenues in the third quarter of 2016 of the CNH industrial Group were $5,749 million, down 1.7% compared to the third quarter of 2015. Net sales of Industrial Activities were $5,461 million, down 1.6% compared to the third quarter of 2015.

In particular, the decrease in net sales of Agricultural Equipment (-3.4% on a constant currency basis) is the result of the decrease in industry volume and unfavorable product mix in the row crop sector in NAFTA.

The increase in Construction Equipment’s net sales (0.5% on a constant currency basis) was driven by favorable volume in APAC, partially offset by lower sales in NAFTA.

Commercial Vehicles’ net sales decreased 3.7% on a constant currency basis primarily as a result of lower volume in all ranges in LATAM mainly due to continuing deterioration of market conditions in Brazil and the Euro V pre-buy impact in the Argentinian market in the second half of 2015.

On a constant currency basis, Powertrain’s net sales increased by 5.9% compared to the third quarter of 2015 due to higher volumes primarily in on-road engine applications.

Financial Services report a 1% decrease at current rates (-2.9% on a constant currency basis) due to a lower average portfolio and reduced interest spreads, partially offset by the positive impact of currency translation.

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Operating profit

Operating profit in the third quarter of 2016 was $278 million, a $10 million decrease compared to the third quarter of 2015. The operating profit margin is slightly lower at 4.8%, compared to 4.9% in the third quarter of 2015.

Considering the first nine months of 2016, operating profit is down by $41 million compared to the first nine months of 2015 and the margin shows a slight improvement (5.6% in the first nine months of 2016 compared to 5.5% in the first nine months of 2015).

Operating profit of Industrial Activities in the third quarter of 2016 was $248 million, in line with the third quarter of 2015, with an operating margin of 4.5%.

The increase in operating profit of Agricultural Equipment was primarily due to net price realization and lower material costs, partially offset by unfavorable volume and unfavorable product mix in NAFTA and EMEA.  

Commercial Vehicles’ improvement is due to positive pricing and manufacturing efficiencies in EMEA trucks and buses, partially offset by lower volume in the specialty vehicle business.

The decrease in the operating profit of Construction Equipment was the result of unfavorable market mix and product mix and negative price realization primarily in NAFTA, partially mitigated by cost containment actions.

Operating profit of Powertrain increased compared to the third quarter of 2015 primarily due to favorable volume and industrial efficiencies.

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Adjusted net income

In the third quarter of 2016 an exceptional non-tax deductible charge was recorded of $38 million related to the repurchase of a portion of the Case New Holland Industrial Inc. 7.875% Notes due 2017.

Net debt

Net industrial debt at September 30, 2016 was $2,673 million compared to $1,578 million at December 31, 2015. Industrial cash flow was a negative $499 million (a negative $479 million in the third quarter of 2016), considering working capital absorption in the first nine months of $989 million and capital expenditures of $290 million and the loss of $38 million on the repurchase of notes. Net debt reflects the payment of dividends and the purchase of treasury stock for appoximately $219 million and currency translation differences of approximately $377 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.
(2) Including fair value hedge adjustments.

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

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Significant events in the third quarter of 2016 and subsequent events

On August 4, 2016 CNH Industrial announced a cash tender offer for up to $450 million of the 7.875% guaranteed senior notes due 2017 issued by its subsidiary Case New Holland Industrial Inc.

The results of the cash tender offer showed a principal amount tendered that was higher than the maximum tender amount of $450 million. Consequently, the notes were purchased subject to proration and then cancelled, while the notes not accepted for purchase were returned. The settlement occurred on August 22, 2016 and resulted in a one-off charge of $38 million that will be more than offset by interest cost savings achieved through the remaining term of the 2017 Notes.

On August 4, 2016 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, including the repurchase of a portion of the outstanding 7.875% Notes due 2017 issued by the subsidiary Case New Holland Industrial Inc.

On September 12, 2016 CNH Industrial announced an exclusive agreement with Hyundai Heavy Industries for the production and development of mini-excavators. This agreement completes CNH Industrial’s investment strategy for its excavator product portfolio expansion.

The two companies will benefit from synergies in product development, sourcing, manufacturing, and possible future powertrain opportunities. The agreement has a ten year term, with a three year renewal option. It applies globally, excluding the South Korean market. Once fully realized, the mini-excavator product offering will include 14 models ranging from one ton to six tons.

On October 21, 2016 CNH Industrial announced that its wholly owned subsidiary, CNH Industrial Capital LLC, has completed its previously announced offering of $400 million in aggregate principal amount of 3.875% notes due 2021, issued at an issue price of 99.441%.

The net proceeds of this offering were approximately $394 million after payment of offering and other related expenses and will be used for working capital and other general corporate purposes, including among other things, the purchase of receivables or other assets in the ordinary course of business. The net proceeds may also be applied to repay CNH Industrial Capital LLC’s indebtedness as it becomes due.

The notes, which are senior unsecured obligations of CNH Industrial Capital LLC, will pay interest semi-annually on April 15 and October 15 of each year, beginning on April 15, 2017, and are guaranteed by CNH Industrial Capital America LLC and New Holland Credit Company LLC, each a wholly owned subsidiary of CNH Industrial Capital LLC. The notes will mature on October 15, 2021.

On October 31, 2016 CNH Industrial announced its agreement to acquire the agricultural Grass and Soil implement business of Kongskilde Industries, part of the Danish Group Dansk Landbrugs Grovvareselskab (DLG A.m.b.A.). This business develops, manufactures and sells solutions for agricultural applications in the Tillage, Seeding and Hay & Forage segments under various brands, including Kongskilde, Överum and JF.

The manufacturing footprint of this business includes two plants in Europe, located in Poland and Sweden. The transaction is subject to various closing conditions, including regulatory approvals.

As a result of the agreement, CNH Industrial’s global agricultural machinery brand New Holland Agriculture will undergo a significant product portfolio extension that will strengthen its Tillage, Seeding and Hay & Forage product offering.

Commercial Register No.64236277 Legal notes | Credits