- Second quarter consolidated revenue declined 16% on lower industry demand
- Second quarter diluted EPS at $0.34; adjusted diluted EPS at $0.38 ($0.52 in the second quarter of 2023)
- Results reflect continued execution of cost savings initiatives mitigating the impact of market headwinds
- Returned $1.2 billion to shareholders through dividends and share repurchases in the first half of 2024
- Full-year guidance updated to reflect weaker market conditions
Basildon, UK — CNH Industrial N.V. (NYSE: CNH) today reported results for the three months ended June 30, 2024, with net income of $438 million and diluted earnings per share of $0.34 compared with net income of $710 million and diluted earnings per share of $0.52 for the three months ended June 30, 2023. Consolidated revenues were $5.49 billion (down approximately 16% compared to Q2 2023) and Net sales of Industrial Activities were $4.80 billion (down approximately 19% compared to Q2 2023). Net cash provided by operating activities was $379 million and Industrial Free Cash Flow generation was $140 million in Q2.
Following the earnings call, JP Morgan analysts said, "Overall, we believe the bullish voices behind CNH are firming based on the cost reduction initiatives, a possible sale of the Construction business, and the hope for the Ag cycle downturn inflecting after 2025."
“I am thrilled to have rejoined the hardworking CNH team. I have long admired this leading company for its iconic brands and truly global presence. After spending my first weeks visiting our plants, dealers, and customers, I am impressed by the focus on advancing our brands’ distinctive positions, developing the product pipeline, accelerating our technology offerings, and turning around the construction business. I’m returning at a challenging point in our industries, and I appreciate the ongoing efforts that our employees have made this past quarter. We will continue to manage the business prudently through 2024 while positioning ourselves for 2025. I am confident in our success and look forward to presenting our strategy with you at an investor day in early 2025.” — Gerrit Marx, Chief Executive Officer
In North America, industry volume was down 11% year-over-year in the second quarter for tractors under 140 HP and was up 2% for tractors over 140 HP; combines were down 5%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 10% and down 36%, respectively. South America tractor demand was down 10% and combine demand was down 26%, continuing the recent negative trend. Asia Pacific tractor demand was up 1% and combine demand was up 4%.
Agriculture net sales decreased for the quarter by 20% to $3.91 billion, primarily due to lower shipment volumes on decreased industry demand and dealer inventory requirements across all regions, partially offset by favorable price realization.
Gross profit margin was 24.4% (27.0% in Q2 2023), down 260 bps as a result of lower production volume and unfavorable mix. These were partially offset by price realization, primarily in North America, and improved purchasing and manufacturing costs.
Adjusted EBIT decreased to $536 million ($821 million in Q2 2023) driven by the lower industry volumes, partially offset by improved purchasing and manufacturing costs, and a continued reduction in SG&A expenses. R&D investments accounted for 5.5% of sales (4.9% in Q2 2023). Income from unconsolidated subsidiaries increased $15 million year-over-year. Adjusted EBIT margin was 13.7% (16.8% in Q2 2023).
2024 Outlook
The Company forecasts that global industry retail sales will continue to be weaker in both the agriculture and construction equipment markets in the second half of 2024. CNH is continuing its efforts to improve through-cycle margins with its previously announced cost reduction programs focused on product costs and SG&A expenses to partially offset the impact of the lower industry demand.
As a result of the lower industry sales projections, the Company is updating its 2024 outlook as follows:
- Agriculture segment net sales(5) down between 15% and 20% year-over-year including currency translation effects (from down 11% to 15% previously)
- Agriculture segment adjusted EBIT margin between 13.0% and 14.0% (from between 13.5% and 14.5% previously)
- Construction segment net sales(5) down between 15% and 20% year-over-year including currency translation effects (from down 7% to 11% previously)
- Construction segment adjusted EBIT margin between 5.0% and 6.0% (unchanged)
- Free Cash Flow of Industrial Activities(6) between $0.7 and $0.9 billion (from between $1.1 to $1.3 billion previously)
- Adjusted diluted EPS(6) between $1.30 to $1.40 (from between $1.45 to $1.55 previously)
