CNH

(26.89% stake, 41.68% of voting rights on issued capital)

 

 

 

Key consolidated data of CNH Industrial for the first half of 2018 are as follows:

  I Half 
$ million 2018 2017 (1) Change
Revenues 14,783 12,749 2,034
Adjusted EBIT (2) 1,072 353 719
Net income (loss) 969 243 726
Net Industrial Debt (3) (1,356) (1,023) (333)
(1) 2017 data have been recast following the retrospective adoption, on 1 January 2018, of the updated accounting standard for revenue recognition (IFRS 15). (2) Adjusted EBIT is a non-GAAP financial measure used to measure performance. Adjusted EBIT is defined as profit/(loss) before taxes, financial income (expense) of financial activities, restructuring costs, and certain non- recurring items. (3) Net Industrial debt is defined as net debt excluding the funded portion of the self-liquidating financial receivables portfolio.

Revenues

Revenues for the first half of 2018 were $14,783 million, an increase of 16% (up 10.7% on a constant currency basis) compared to the first half of 2017. Net revenues of Industrial Activities were $13,880 million in the first half of 2018, an increase of 17.5% (up 11.8% on a constant currency basis) compared to the first half of 2017.

Net revenues of Agricultural Equipment were $5,891 million, an increase of 17.7% (up 15.0% on a constant currency basis) compared to the first half of 2017, primarily due to higher sales, volumes and positive net price realization. In the first half of 2018, worldwide industry unit sales increased 8% compared to the first half of 2017. In NAFTA, industry volumes in the over 140 hp tractor market sector were up 5% and combines were up 14%. Industry volumes for under 140 hp tractors in NAFTA were up 6%. EMEA markets were down 3% for tractors and up 8% for combines. In LATAM, the tractor markets decreased 7% and the combine markets increased 1%. APAC markets increased 12% and 1% for tractors and combines, respectively.

Net revenues of Construction Equipment were $1,481 million for the first half of 2018, an increase of 28.6% from the first half of 2017 (up 26.3% on a constant currency basis), as a result of a favorable end user industry demand environment. During the period, Construction Equipment’s worldwide heavy equipment and worldwide light equipment industry sales were up 32% and 18%, respectively, compared to the first half of 2017.

Commercial Vehicles’ net revenues were $5,384 million, an increase of 14% (up 5.4% on a constant currency basis), primarily as a result of favorable product mix and positive price realization.

Powertrain net revenues were $2,405 million for the first half of 2018, a 12.5% increase over the first half of 2017, (up 3.2% on a constant currency basis), as a result of higher sales volume. Sales to external customers accounted for 49% of total net revenues (46% in the first half of 2017).

Financial Services reported net revenues of $1,000 million for the first half of 2018, a decline of 1.4% compared to the first half of 2017 (down 2.1% on a constant currency basis), primarily due to a lower average portfolio balance in NAFTA.

  I Half  Change
$ million 2018 2017 amount %
Agricultural Equipment 5,891 5,006 885 17.7
Construction Equipment 1,481 1,152 329 28.6
Commercial Vehicles 5,384 4,723 661 14.0
Powertrain 2,405 2,138 267 12.5
Elimination and other (1,281) (1,203) (78) 6.5
Total Industrial Activities 13,88 11,816 2,064 17.5
Financial Services 1 1,014 (14) (1.4)
Eliminations and other (97) (81) (16) 19.8
Revenues 14,783 12,749 2,034 16.0
(1) 2017 data have been recast following the retrospective adoption, on 1 January 2018, of the updated accounting standard for revenue recognition (IFRS 15).

Adjusted EBIT

Adjusted EBIT of Industrial Activities was $785 million in the first half of 2018, a $321 million increase over the first half of 2017, with an adjusted EBIT margin of 5.7%, up 1.8 p.p. compared to the first half of 2017.

Adjusted EBIT of Agricultural Equipment was $555 million for the first half of 2018 ($346 million for the first half of 2017). Adjusted EBIT margin increased 2.5 p.p. to 9.4% compared to the six months ended 30 June 2017. The increase was due to favorable volume, better mix and positive net price realization. CNH Industrial continues to invest in its product development program for precision farming and compliance with Stage V emissions requirements.

Adjusted EBIT of Construction Equipment was $20 million for the first half of 2018 (negative adjusted EBIT of $43 million for the first half of 2017). Adjusted EBIT margin increased 5.1 p.p. to 1.4% compared to the six months ended 30 June 2017. Results were favorably impacted by higher sales volume, favorable product mix and positive net price realization, more than offsetting raw material cost increases.

Adjusted EBIT of Commercial Vehicles was $143 million for the first half of 2018 ($73 million in the six months ended 30 June 2017). Adjusted EBIT margin increased 1.2 p.p. to 2.7% compared to the six months ended 30 June 2017. The increase was mainly due to favorable product mix and net positive price realization.

Adjusted EBIT of Powertrain was $198 million for the first half of 2018 ($163million in the six months ended 30 June 2017). Adjusted EBIT margin increased 0.6 p.p. to 8.2% compared to the six months ended 30 June 2017, as a result of higher volumes and manufacturing efficiencies, partially offset by negative net price realization and product development spending.

  I Half  Change 
$ million 2018 2017 amount %
Agricultural Equipment 555 346 209 60.4
Construction Equipment 20 (43) 63 (146.5)
Commercial Vehicles 143 73 70 95.9
Powertrain 198 163 35 21.5
Elimination and other (131) (75) (56) 74.7
Total Industrial Activities 785 464 321 69.2
Financial Services 287 255 32 12.5
Eliminations and other - - - -
Adjusted EBIT 1,072 719 353 49.1
(1) 2017 data have been recast following the retrospective adoption, 1 January 2018, of the updated accounting standard for revenue recognition (IFRS 15).

Net industrial debt

Net industrial debt at 30 June 2018 was $1,356 million compared to $1,023 million at 31 December 2017. The decrease in net debt reflects the positive impact of exchange rate differences. The cash generation from operating activities is more than offset by the distribution of dividends to shareholders for $235 million and by the purchase of CNH Industrial N.V. shares for $134 million under the share buy-back program.

$ million 06/30/2018 12/31/2017 Change
Third party debt (1) (24,427) (26,014) 1,587
Derivative hedging debt     0
Cash and cash equivalents 5,217 6,2 (983)
Other/financial asset/(liabilities)(2) (13) (21) 8
(Net debt)/Cash(3) (19,223) (19,835) 612
Industrial Activities (1,356) (1,023) (333)
Financial Services (17,867) (18,812) 945
(1) As a result of the role played by the central treasury, debt for industrial Activities also includes funding raised by the central treasury on behalf Financial Services. (2) Including fair value of derivative financial instruments. (3) The net intersegment receivable/payable balance owed by Financial Services to Industrial Activities was $92 million and $642 million as of 30 June 2018 and 31 December 2017, respectively.

Significant events in the first half of 2018 and Subsequent events

On 20 February 2018, CNH Industrial announced that the United States Supreme Court ruled in its favor in Reese vs. CNH Industrial N.V. and CNH Industrial America LLC. The decision allows CNH Industrial to terminate or modify various retiree healthcare benefits (“Benefits”) previously provided to certain UAW Union represented Company retirees. On 16 April 2018, CNH Industrial announced it determined to modify the Benefits provided to the applicable retirees to make them consistent with the Benefits provided to current eligible CNH Industrial retirees who had been represented by the UAW. The Benefits modification was finalized in the second quarter of 2018 and resulted in a reduction of the plan liability by $527 million, realizing a corresponding pre-tax gain which was recorded in the second quarter in its entirety.

On 27 April 2018, CNH Industrial launched a buy-back program (the “Program”) involving the repurchase from time to time of up to $700 million in the Company’s common shares. The Program has a duration up to and including 12 October 2019 and will be conducted in the framework of the buy-back authorization granted by the shareholders’ meeting held on 13 April 2018.

On 27 April 2018, Moody’s Investors Service (“Moody’s”) affirmed the Ba1 corporate family rating of CNH Industrial N.V. and the Ba1 senior unsecured rating of CNH Industrial Capital LLC, raising the outlook to positive from stable for both companies. At the same time, Moody’s upgraded the ratings of the senior unsecured debt of CNH Industrial N.V. and CNH Industrial Finance Europe S.A. to Ba1 from Ba2.

Effective 27 April 2018, the Board of Directors has appointed Mr. Derek Neilson as Interim Chief Executive Officer of CNH Industrial following Mr. Tobin’s departure, as already announced by the Company on 19 March 2018. The Board of Directors will continue the process that is already under way to select a permanent Chief Executive Officer through its published governance process.

On 21 July 2018, the Board of Directors appointed Ms. Suzanne Heywood as Chairman with immediate effect.

On 25 July 2018, the Board of Directors learned with deep sadness that Mr. Sergio Marchionne had passed away.

On 8 August 2018 S&P Global Ratings raised the long- term issuer credit ratings of CNH Industrial N.V. and its subsidiary, CNH Industrial Capital LLC, to “BBB” from “BBB-”. The short-term rating of CNH Industrial Capital LLC's commercial paper program was raised to “A-2” from “A-3”. The outlook of both companies is stable.

Additionally, S&P Global Ratings raised the issue-level ratings on CNH Industrial N.V. and its industrial subsidiaries' debt, as well as the issue-level ratings on CNH Industrial Capital LLC's senior unsecured debt, to “BBB” from “BBB-”.

On 9 August 2018 CNH Industrial announced the appointment of Hubertus M. Mühlhäuser as Chief Executive Officer, effective 17 September 2018. To be based at the Company's Burr Ridge, Chicago, USA offices, he brings extensive leadership experience at multinational industrial companies a deep knowledge of the agriculture and construction sectors as well as strategic expertise. The Company anticipates convening an extraordinary shareholders’ meeting seeking shareholder approval for the appointment of Mr. Mühlhäuser to the Company’s Board of Directors.

2018 Outlook (US GAAP)(1)

CNH Industrial manages its operations, assesses its performance and makes decisions about resource allocation based on financial results prepared only in accordance with U.S. GAAP, and, accordingly, also the full year guidance presented below is prepared under U.S. GAAP.

As a result of the sustained profitability improvement in the second quarter of 2018, CNH Industrial is updating its guidance for the full year 2018 as follows:

  • Net sales of Industrial Activities unchanged at approximately $28 billion;
  • Adjusted diluted EPS increased to between $0.67 and $0.71 per share;
  • Net industrial debt at the end of 2018 improved to between $0.7 billion and $0.9 billion.

(1) 2018 guidance does not include any impacts under U.S. GAAP deriving from the gain resulting from the modification of a healthcare plan in the U.S. anticipated on 16 April 2018, as this gain has been considered non-recurring and therefore treated as an adjusting item for the purpose of the adjusted diluted EPS calculation. In addition, 2018 guidance does not include any impact deriving from possible further repurchases of Company’s shares under the plan authorized by the AGM on 13 April 2018.

 

 

Commercial Register No.64236277 Legal notes | Credits