London — CNH Industrial N.V. has reported fourth quarter and full year 2019 results for the period ended Dec. 31, 2019, stating that consolidated revenues were $28.1 billion for the full year 2019, down 6% compared to 2018 (down 2% on a constant currency basis). Net sales of Industrial Activities were $26.1 billion for the year, down 6% compared to the prior year (down 2% on a constant currency basis). In the fourth quarter of 2019, consolidated revenues were $7.7 billion, down 6% compared to the fourth quarter of 2018 (down 4% on a constant currency basis). Net sales of Industrial Activities were $7.2 billion in the fourth quarter of 2019, down 7% compared to the fourth quarter of 2018 (down 4% on a constant currency basis).

Net income was $1,454 million for the full year 2019. In the fourth quarter of 2019, net income was $120 million compared to $258 million in the fourth quarter of 2018.

Agriculture

Agriculture’s net sales totaled $11 billion in the full year 2019, down 6% compared to 2018 (down 3% on a constant currency basis). The decrease was primarily driven by lower industry volumes in North America and Rest of World markets, coupled with actions to reduce dealer inventories in the second half of the year, partially offset by price realization performance across all geographies and sustained aftermarket activity. In the fourth quarter of 2019, Agriculture’s net sales totaled $2.9 billion, down 7% compared to the fourth quarter of 2018 (down 5% on a constant currency basis), as result of lower industry volumes partially offset by positive price realization performance. The company cited positive pricing, disciplined cost management, industrial efficiencies and a reduction in short-term incentive compensation expense as being more than offset by lower wholesale volume and market and product mix, including negative industrial absorption primarily from the lower production level mainly in the second half of the year, as well as higher product costs as result of increased raw material costs and tariffs.

Construction

Construction’s net sales totaled $2.8 billion in the full year 2019, down 8% compared to 2018 (down 6% on a constant currency basis), as result of lower net sales in North America and Rest of World markets due to weaker market conditions and actions to reduce dealer inventory levels in the second half of the year, partially offset by positive price realization. In the fourth quarter of 2019, Construction’s net sales totaled $0.7 billion, down 13% compared to the fourth quarter of 2018 (down 12% on a constant currency basis), driven by unfavorable volume and mix in North America and Rest of World markets. The company said positive pricing was more than offset by unfavorable volume and mix in North America and Rest of World markets, including negative industrial absorption, and higher product costs primarily related to increased raw material costs and tariffs, and costs associated with its product quality excellence initiative.

Commercial & Specialty Vehicles

Commercial and Specialty Vehicles’ net sales totaled $10.4 billion in the full year 2019, down 5% compared to 2018 (up 1% on a constant currency basis), driven by increased deliveries in bus and specialty vehicles, sustained aftermarket activity and positive pricing, more than offset by reduced wholesale volumes in Medium & Heavy trucks in both Europe, as the company is transitioning to a new commercial policy and refreshed product offering, and South America, primarily due to low industry volume in Argentina. In the fourth quarter of 2019, Commercial and Specialty Vehicles’ net sales totaled $3.0 billion, down 5% compared to the fourth quarter of 2018 (down 1% on a constant currency basis). Positive pricing was more than offset by volume calendarization and negative impact of foreign currency translation.

The company cited negatives impacts in higher product costs, foreign exchange transaction impacts, and the remeasurement of certain provisions completed in the fourth quarter, partially offset by favorable volume and mix, positive price realization and a reduction in short-term incentive compensation expense, in addition to the impact from the remeasurement of certain provisions.

Powertrain

Powertrain’s net sales totaled $4.1 billion in the full year 2019, down 10% compared to 2018 (down 5% on a constant currency), due to lower sales volume. Sales to external customers accounted for 51% of total net sales (50% in 2018). In the fourth quarter of 2019, net sales totaled $1 billion, down 15% compared to the fourth quarter of 2018 (down 13% on a constant currency basis), due to the 2018 transition engine activity in anticipation of Stage V.

The company said unfavorable volume and mix and higher product development investment geared towards the “Transform2Win” strategy initiatives , partially offset by positive pricing and product cost efficiencies. The company also cited negatives impact as a result of unfavorable volume and mix, partially offset by positive pricing.

Financial Services

Financial Services’ revenues totaled $2 billion in the full year 2019, an increase of 1% compared to 2018 (up 3% on a constant currency basis), primarily due to higher average portfolio. In the fourth quarter of 2019, revenues totaled $0.5 billion, a 2% increase compared to the fourth quarter of 2018 (up 4% on a constant currency basis).

Full year 2019 net income was $361 million, a decrease of $24 million compared to the same period in 2018, primarily attributable to margin reductions in dealer financing activities and higher credit provisions compared to a very favorable 2018. In the fourth quarter of 2019, net income was $93 million, an increase of $5 million compared to the fourth quarter of 2018.

2020 Outlook

In Agriculture, the company expects farmers’ sentiment to gradually stabilize during 2020, despite a muted industry environment in the major markets in which the company competes, where soft commodity prices remain under pressure. However, in this uncertain market scenario, CNHI will continue to manage production prudently until it sees signs of improved end-market demand, especially in 1Q20. At the same time, the company will maintain strict cost discipline and accelerate its simplification and optimization initiatives, while continuing to invest in precision & digital farming solutions.

In Powertrain, 2020 is expected to be a transition year due to the full ramp up of the Stage V adoption in Europe. In addition, the company is decisively accelerating the investment pipeline to develop multiple fuel propulsion offerings, where it expects to complement the company’s low-emission diesel propulsion and its market leading CNG/LNG alternative offerings with new BEV and FCEV solutions, which will form part of the company’s sustainable journey in the “Transform2Win” strategy.

In summary, while the company continues to act prudently as a result of prevailing market uncertainties, it plans to step up its efforts on performance and cost initiatives to drive profitability, while continuing its strategic investments in digitalization, automation and alternative propulsion.

In light of the aforementioned industry headwinds and the Company’s initiatives planned for 2020, CNH Industrial is issuing the following 2020 guidance:

• Net sales of Industrial Activities flat to slightly down to prior year in constant currency
• Free cash flow of Industrial Activities expected between $400 million and $600 million

Finally, CNHI is fully on track with the separation of its On-Highway and Off-Highway businesses with the target to complete the spin-off in January 2021, supported by specialist financial and business advisors.