CNH Industrial beats earnings estimates, confirms outlook despite recession fears

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Flags with the CNH Industrial logo are pictured in front of the CNH Industrial Building in Turin, Italy, February 5, 2020. REUTERS/Massimo Pinca/File Photo

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  • Revenue from Industrial Activities increased to $6.08 billion in the second quarter
  • Adjusted industrial EBIT increased 14% to $654 million
  • CO confirmed FY forecasts for 2022
  • Completed divestment of Raven’s non-core businesses

MILAN, July 29 (Reuters) – Agricultural and construction equipment maker CNH Industrial (CNHI.MI) on Friday beat estimates with a 14% rise in industrial operating profit in the second quarter and confirmed its full-year outlook, although it is based on preparing for a global recession.

“Whether we face a global recession in 2023 is up for debate, but we’re bracing for that eventuality,” Chief Executive Scott Wine told analysts in a post-earnings call.

The Italian-American company, whose brands include Case IH, Steyr and New Holland, said adjusted earnings before interest and taxes (EBIT) from industrial operations reached $654 million for the April-June period, ahead of a forecast of Surpassed $605 million in a compiled analyst poll by Reuters.

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“Prices, volumes and a favorable mix offset a significant increase in costs,” Wine said.

He warned of “a decidedly less favorable climate for the next few quarters,” but said the group expects to meet its full-year guidance of net sales from industrial activities rising between 10% and 14% and free cash flow of more than $1 billion.

By 1520 GMT, the group’s Milan-listed shares were up 5.6%, among the best performers in the Italian blue-chip index (.FTMIB).

Wine pointed to the strong US dollar affecting agricultural commodity prices, with a possible further deterioration in farmer sentiment and income and a possible fall in European industrial demand due to the war in Ukraine, energy risks and inflation.

He added, however, there are indications that the supply chain crisis is abating.

“We’re unfortunately familiar with escalations in raw material, labor and freight costs, but we’re finally seeing signs that their impact is diminishing,” he said.

Wine also said CNH this week completed the sale of Aerostar, the aerospace and defense solutions business of its US unit Raven.

In a separate statement later Friday, Maryland-based TCOM Holdings announced the purchase of Aerostar.

Financial details of the transaction were not disclosed.

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Reporting by Giulio Piovaccari; Edited by David Holmes and Keith Weir

Our standards: The Thomson Reuters Trust Principles.

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