CNH Industrial

CNH

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

Key consolidated figures of CNH Industrial for the first half 2019 are as follows:

  I Half  Change 
$ million 2019 2018
Revenues 14,011 14,783 (772)
Revenues in € 12,401 12,214 187
Adjusted EBIT (1) 1,041 1,072 (31)
Net Income 654 969 (315)
of which attributable to owners of the parent 635 951 (316)
Net Industrial Debt (2) (2,013) (640) (1,373)

(1) Adjusted EBIT is a non-GAAP financial measure used to measure performance. Adjusted EBIT is defined as profit/(loss) before taxes, financial income<br />(expense) of industrial activities, restructuring costs, and certain non- recurring items.
(2) Net Industrial debt is defined as net debt excluding the funded portion of the sell-liquidating financial receivables portfolio

Revenues

Revenues for the first half of 2019 were $14,011 million, a decrease of 5.2% (up 1.8% on a constant currency basis) compared to the first half of 2018. Net revenues of Industrial Activities were $13,095 million in the first half of 2019, a decrease of 5.7% (up 1.5% on a constant currency basis) compared to the first half of 2018 as result of an unfavorable foreign currency translation impact and lower sales volume.

Net revenues of Agriculture were $5.595 million, a decrease of 5.0% (up 1.3% on a constant currency basis) compared to the first half of 2018 as a result of lower sales volume in Europe and Rest of World and the negative impact of foreign currency translation, partially offset by positive price realization performance across all geographies.
In the first half of 2019 worldwide industry unit sales for tractors were down 9% compared to the first half of 2018, while worldwide industry sales for combines were down 1%. In the North America, industry volumes in the over 140 hp tractor market sector were down 4% and combines were down 2%. Industry volumes for under 140 hp tractors in North America were up 1%. European markets were up 11% and down 19% for tractors and combines, respectively. In South America, the tractor market decreased 9% and the combine market increased 12%. Rest of World markets decreased 13% for tractors and increased 4% for combines.

Net revenues of Construction decreased 5.7% in the first half of 2019 compared to the first half of 2018 (down 2.6% on a constant currency basis), primarily due to a selective inventory destocking actions in the North American dealer network, and weaker markets in Rest of World more than offsetting positive price realization across all geographies. In the first half of 2019, Construction&rsquo;s worldwide compact equipment industry sales were up 5% compared to the first half of 2018, while worldwide general equipment industry sales were flat compared to the same period of the 2018 and worldwide road building and site equipment industry sales were down 7%.

Commercial and Specialty Vehicles net revenues decreased by 4.9% in the first half of 2019 compared to the first half of 2018 (up 4.1% on a constant currency basis). Higher industry volume and favorable product mix, mainly in Europe, were more than offset by the negative impact of foreign currency translation.

Powertrain net revenues decreased by 9.6% in the first half of 2019 compared to the first half of 2018 (down 0.5% on a constant currency basis) due to lower sales volume. Sales to external customers accounted for 48% of total net revenues (49% in the first half of 2018).

Financial Services totaled net revenues of $990 million for the first half of 2019, a decrease of 1.0% compared to the first half of 2018 (up 5.2% on a constant currency basis), primarily due to pricing and the negative impact of foreign currency translation, partially offset by higher used equipment sales in North America and higher average portfolios in South America and Rest of World.

    I Half 
$ million 2019 2018 % Change
Agricolture 5,595 5,891 - 5.0
Costruction 1,397 1,481 - 5.7
Commercial and Specialty Vehicles 5,518 5,384 - 4.9
Powertrain 2,173 2,405 - 9.6
Elimination and other (1,188) (1,281) -
Total Industrial Activities 13,095 13,880 - 5.7
Financial Services9901,000 - 1.0 
Eliminations and other(74)(97) 
Revenues14,01114,783 - 5.2 

Adjusted EBIT

Adjusted EBIT of Industrial Activities was $791 million in the first half of 2019, compared to $785 million in the first half of 2018, with an adjusted EBIT margin of 6.0%, up 30 bps compared to the first half of 2018.

Adjusted EBIT of Agriculture was $490 million in the first half of 2019 ($555 million in the first half of 2018, with an Adjusted EBIT margin at 8.8%. Positive net price realization was more than offset by unfavorable volume and mix, raw material headwinds and higher production costs and tariffs, as well as higher product development expenses compared to the first half of 2018.

Adjusted EBIT of Construction was $31 million for the first half of 2019 (up $11 million compared to the first half of 2018), with an Adjusted EBIT margin of 2.2%. The increase in profit was primarily due to the result of positive net price realization, mainly in North America, more than offsetting higher production costs and tariffs.

Adjusted EBIT of Commercial and Specialty Vehicles was $184 million for the first half of 2019, up $41 million compared to the first half of 2018. The increase was the result of positive volume, favorable product mix and lower selling, general and administrative costs, partially offset by higher product content cost and unfavorable foreign exchange impacts. The Adjusted EBIT margin increased 90 bps to 3.6% compared to the first half of 2018.

Adjusted EBIT of Powertrain was $184 million for the first half of 2019 ($198 million in the first half of 2018). Favorable product mix and manufacturing efficiencies were more than offset by higher product development expenses and negative foreign exchange impacts. The Adjusted EBIT margin increased 30 bps to 8.5% in the first half of 2019.

    I Half  Change2019
adjusted
EBIT
margin (1)
2018
adjusted
EBIT
margin
$ million 2019 2018 amount   
Agricolture 490 555 (65)8,8% 9,4% 
Costruction 31 20 -112,2% 1,4% 
Commercial and Specialty Vehicles 184 143 413,6% 2,7% 
Powertrain 184 198 (14)8,5% 8,2% 
Unallocated items, elimination and other (98) (131) 33- -
Total Industrial Activities 791 785 66,0% 5,7%  
Financial Services250287(37)25,3% 28,7% 
Eliminations and other- 
Adjusted EBIT1,0411,072 (31)7,4% 7,3% 

(1) On 1 January 2019, CNH Industrial adopted the updated accounting standard on leases (IFRS 16) using the modified retrospective approach, without recasting prior periods. Adoption of the standard had an immaterial impact on adjusted EBIT in the first half of 2019.

The following table is the reconciliation of Net income to Adjusted EBIT (non-GAAP measure).

    I Half 
$ million 2019 2018
Net Income 654 969
Add back:

Financial expenses 135 306
Income tax expenses 216 314
Adjustemets:

Restructuring costs 36 10
Pre-tax gain related to the modification of a healthcare plan in the U.S.0(527)
Adjusted EBIT1,0411,072 

Net Industrial debt

The increase in Net Debt at 30 June 2019 compared to 31 December 2018 mainly reflects the seasonal cash absorption related to operating activities, the distribution of the annual dividend to CNH Industrial N.V.'s shareholders for $275 million, the purchase of CNH Industrial N.V. shares for $45 million under the Company buyback program and the impact of adoption of IFRS 16 - Leases on 1 January 2019.

$ million 06/30/2019 12/31/2018Change
Third party debt (1) (24,997) (24,543)(354)
Cash and cash equivalents 4,346 5,803(1,457)
Other/financial asset/(liabilities)(2) (15) (10)(5)
(Net debt)/Cash(3)(20,566)(18,750)(1,816)
Industrial Activities(2,013)(640)(1,373
Financial Services(18,553)(18,110)(2,456)

(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 of 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 $326 million and $71 million as of 30 June 2019 and 31 December 2018, respectively. 

2019 Outlook (US GAAP)(1)

While uncertainties in the agricultural end-markets related to the trade tensions remain unresolved, and negative impacts from recent weather events (in North America, Australia and Northern Europe) are persisting, which has impacted planting and harvesting patterns and market sentiment, cyclical replacement demand remains stable, with used equipment inventories at low levels supporting new equipment sales in North America. End-user demand in the construction industry remains healthy, supported by spending for public and infrastructure investments. Despite this strength, conditions in the construction industry are still challenged in the residential subsegment.
European demand in the truck and bus industries continues to hold at a high level, supported by a low interest rate environment, and by the transition to lower emission vehicles including full electric and hybrid buses, and LNG and CNG powered trucks.

As a result of the updated end-markets outlook, CNH Industrial is revising its full year net sales guidance reflecting the impact on net sales of the euro/dollar exchange rate performance of the first six months of the year, while confirming all the other 2019 targets as follows: 

  • Net sales of Industrial Activities between $27 billion and $27.5 billion, with sales up year-over-year 1% to 2% at constant currency; 
  • Adjusted diluted EPS(2) up year-over- year between 5% and 10% at a range of $0.84 to $0.88 per share; 
  • Net debt of Industrial Activities at the end of 2019 between $0.4 billion and $0.2 billion.

(1) 2019 guidance does not include any impacts deriving from the gain resulting from the modification of the healthcare plan in the U.S. previously mentioned, 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, 2019 guidance does not include any impacts deriving from possible further repurchases of CNH Industrial&rsquo;s shares under the plan authorized by the Shareholders on 12 April 2019.
(2) Outlook is not provided on diluted EPS, the most comparable GAAP financial measure of this non-GAAP financial measure, as the income or expense excluded from the calculation of adjusted diluted EPS and instead included in the calculation of diluted EPS are, by definition, not predictable and uncertain. 

Commercial Register No.64236277 Note legali | Credits