London, UK — CNH Industrial N.V. (NYSE:CNHI / MI:CNHI) today announced consolidated revenues of $6,948 million for the second quarter of 2017, up 2.9% compared to the second quarter of 2016. Net sales of Industrial Activities were $6,655 million in the second quarter of 2017, up 3.2% compared to the second quarter of 2016. Reported net income was $247 million for the second quarter of 2017. Adjusted net income was $266 million for the second quarter, with adjusted diluted EPS of $0.19, up 19% compared to the second quarter of 2016. Operating profit of Industrial Activities was $481 million for the second quarter of 2017, a $28 million increase compared to the second quarter of 2016, with an operating margin of 7.2%, up 0.2 p.p. compared to the second quarter of 2016.
Income taxes were $113 million in the second quarter of 2017 ($107 million in the second quarter of 2016). Adjusted income taxes for the second quarter of 2017 were $123 million ($107 million in the second quarter of 2016). The adjusted effective tax rate (adjusted ETR) was 34% (36% in the second quarter of 2016).
Net industrial debt was $2.1 billion at June 30, 2017, in line with March 31, 2017, with cash flow generation from industrial operations of more than $400 million in the second quarter, offset by the payment of $161 million in dividends to shareholders in May 2017 and a foreign exchange impact on euro denominated debt. Total debt was $25.5 billion at June 30, 2017, compared to $24.5 billion at March 31, 2017. At June 30, 2017, available liquidity was $8.3 billion, up $0.8 billion compared to March 31, 2017.
Agricultural Equipment’s net sales increased 3.0% in the second quarter of 2017 compared to the second quarter of 2016 (up 3.3% on a constant currency basis), as a result of a strong rebound in demand in LATAM. Net sales increased in APAC, mainly driven by favorable volume in Australia, and in the EMEA region. Net sales, as forecast, were down in NAFTA due to unfavorable industry volume in the small grain and hay & forage product lines.
Operating profit was $303 million in the second quarter ($301 million in the second quarter of 2016), with an operating margin of 10.5% (down 0.2 p.p. compared to the second quarter of 2016). Favorable volume in LATAM including improved fixed cost absorption, and disciplined net price realization across all regions, offset negative volume and mix in NAFTA and increased spending on research and development.
Construction Equipment’s net sales increased 13.6% in the second quarter of 2017 compared to the second quarter of 2016 (up 13.5% on a constant currency basis), as a result of a strengthening of NAFTA and APAC markets.
Operating profit was $17 million in the second quarter of 2017, flat compared to the second quarter of 2016, with an operating margin of 2.5% (down 0.4 p.p. compared to the second quarter of 2016). The favorable volume trend was offset by foreign exchange impact on product cost. Net pricing was stable across the major markets.
2017 Outlook
During the first half of 2017, market conditions across all major segments have been better than originally expected, despite continued inventory destocking efforts in high horsepower tractors in NAFTA row-crop, weakened demand in hay & forage product lines, and persisting end-market weakness in France. Therefore, the Company is leading its 2017 guidance for sales and EPS to the upper end of the range while keeping the net industrial debt guidance unchanged as follows:
• Net sales of Industrial Activities of approximately $24 billion;
• Adjusted diluted EPS of approximately $0.41;
• Net industrial debt at the end of 2017 between $1.4 billion and $1.6 billion.
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