CNH Posts Full Year Sales Growth of 13% to $14.5 Billion

  • 17% Growth in Q4
  • Equipment Operations operating profit increased 138% to $889 million
  • Net Income before restructuring and exceptional items improved to $496 million, at an EPS of $2.08
  • Net Sales improve 13% to $14.5 billion (11% on a constant currency basis)
  • Agricultural equipment +8% (6% on a constant currency basis)
  • Construction equipment +39% (35% on a constant currency basis)
  • Equipment Operations operating profit of $889 million, an increase of 138%
  • Equipment Operations generated $1.8 billion in cash flow from operations; net cash of $2.2 billion at year-end
  • FY Net inventory reduction of $323 million, significant improvement in ageing profile of inventory
  • FY diluted EPS before exceptional items at $2.08 per share, benefitted from one time tax adjustments, compared to a loss of $0.48 per share in 200
  • CNH Global N.V. (NYSE: CNH) today announced financial results for the year ended December 31, 2010. For the year, net sales increased 13% (11% on a constant currency basis) to $14.5 billion on the back of improving demand for agricultural equipment driven by increased prices in global agricultural commodities and construction equipment demand in the Americas and Rest of World markets. Equipment Operations posted an Operating Profit of $889 million as a result of these higher volumes, increased industrial utilization in the Americas, and improved product mix. This positive performance was tempered by Western Europe markets remaining at low demand levels, increased raw material prices, and new product launch costs primarily in the construction equipment sector during the fourth quarter.

Net sales were 80% agricultural equipment and 20% construction equipment for the year. The geographical distribution of revenue for the period was 41% North America, 23% Western Europe, 19% Latin America, and 17% Rest of World markets.

Equipment Operations generated $1.8 billion in cash flows from operations for the year including a $323 million reduction of net inventory. Year to date capital expenditures totaled $301 million, a 39% increase from the comparable period largely as a result of new product launches; 80% of the full year capital spend was on new products and production capacity. CNH's Equipment Operations ended the period with a net cash position of $2.2 billion. The effective tax rate for 2010 was 19%, which was favorably impacted by the settlement of certain tax items in the fourth quarter and certain valuation allowances. The Group expects to return to a more normalized effective tax rate of 36% to 40% in 2011.

Net income before restructuring and exceptional items for the period was $496 million as a result of improved top line and industrial operating performance, better results from the Group's non-consolidated entities, and a lower tax rate. This resulted in the Group generating a significant increase in full year diluted earnings per share to $2.08 (before restructuring and exceptional items) compared to a loss of $0.48 per share in 2009.

2011 Market Outlook

CNH anticipates that in 2011 the global agricultural markets will be flat to up 5% in tractors and up 5-10% in combines; in the global construction equipment market CNH's outlook for 2011 is for an increase of between 8-12% in light equipment and 5-10% in heavy equipment.

2011 CNH Outlook

CNH expects to outperform the market in unit growth as a result of new product launches, geographic footprint diversification, and heavy equipment bias in the agricultural sector resulting in an increased operating profit and margin from volume and industrial leverage.

· Revenues on a constant currency basis are expected to be up by as much as 10% compared to the full year 2010.

· Operating margin is expected to be between 7.1% and 7.9% consistent with our Strategic Business Plan.

Source: CNH Press Release