Fiat Group owned CNH Global reported fourth quarter 2005 net income of US$7 million, compared to US$26 million for 2004. Results include restructuring charges, net of tax, of US$36 million in the fourth quarter of 2005, and US$22 million during the same period last year. Net income excluding restructuring charges was US$43 million in the fourth quarter of 2005, compared to US$48 million in the prior year. Fourth quarter diluted earnings per share of US$.03 compared with US$.11 in 2004. Before restructuring, fourth quarter diluted earnings per share were US$.17, compared with US$.21 in 2004.

CNH's net income for the full year 2005 improved by approximately 30% to US$163 million, compared to US$125 million for 2004. Results include restructuring charges, net of tax, of US$60 million in 2005 compared to US$68 million in the same period of 2004. Net income excluding restructuring charges was US$223 million, up 16% from US$193 million in 2004. Diluted earnings per share were US$.70, compared to US$.54 in 2004. Before restructuring, full-year diluted earnings per share increased to US$.95 compared to US$.83 in the prior year.

"We are pleased with the continuing improvements in both gross margin and industrial operating margin that began at mid-year and continued through the fourth quarter," said Harold Boyanovsky, President and Chief Executive Officer. "We met expectations for full-year profit improvement and exceeded our target for reduction of equipment operations net debt."

Other highlights from the quarter included the following: Compared with 2004's fourth quarter, material costs, including steel and plastics, have continued to increase, albeit at a more moderate pace; however, the industry pricing environment remained strong and CNH was able to offset these impacts. At constant exchange rates, Equipment Operations working capital declined by approximately $320 million during the year, primarily resulting from CNH's initiatives to consolidate management of receivables within its Financial Services operations. Equipment Operations net debt declined during the fourth quarter by US$120 million.  For the full year 2005, net debt declined by US$566 million to US$719 million, in part, due to the reduction in working capital.  At year-end 2005 CNH Equipment Operations' net-debt-to-net-capitalisation ratio was 12.5%, compared to 20.4% at year-end 2004.

"In the quarter, operations were reorganized into four distinct global brand structures. Going forward, our focus on our Case IH and New Holland agricultural equipment brands and our Case and New Holland construction equipment brands will be the cornerstone of our performance improvements," Boyanovsky said. "Creation of the global brand structures has been met with solid enthusiasm from our employees, dealers and customers. This change is already helping the brands gain traction and build momentum for improved performance in 2006. To emphasize the new global structure, the CNH logo now incorporates the names of our brand families, Case New Holland," he said.  "Of course, within this new structure, our dealers and customers will continue to benefit from the strong support of CNH Capital."

GLOBAL AGRICULTURAL EQUIPMENT MARKET OUTLOOK FOR 2006

CNH believes that for the full year, worldwide industry unit retail sales of agricultural tractors will be slightly lower than in 2005 in every major market, but should remain at among the highest levels of retail unit sales in the past five years. Industry unit retail sales of under-40 horsepower tractors in North America are expected to be down 5 to 10% from the high levels of 2005.
 

Sales of over-40 horsepower tractors in North America are expected to remain at about the same level as in 2005. Agricultural tractor markets in Western Europe and Rest-of-World could be down as much as 5%, while tractor industry unit retail sales in Latin America could be down about 10%. Worldwide industry unit retail sales of combine harvesters may be down 5 to 10%, with similar declines in each major market.

GLOBAL CONSTRUCTION EQUIPMENT MARKET OUTLOOK FOR 2006

CNH believes that for the full year, worldwide industry unit retail sales of construction equipment will be stronger than in 2005. Worldwide industry unit retail sales of heavy construction equipment are expected to increase by about 5%, led by approximately 10% higher sales in Rest-of-World markets and an increase of nearly 5% in North America. Industry unit sales in Western Europe should be about the same level as in 2005, but could be down as much as 10% in Latin America after two very strong years of industry unit sales increases. Worldwide industry unit retail sales of light construction equipment could be flat to up slightly, with sales in North America flat to up 5%. Industry unit retail sales also are expected to be up slightly in Rest-of-World markets. In Western Europe, industry retail unit sales are expected to be about the same level as in 2005, while sales in Latin America could be down 5 to 10%.

CNH OUTLOOK FOR 2006

CNH expects that its net sales of equipment for the full year will increase by about 2 to 5%. Improvements in market share, continuing pricing and ongoing margin improvements at Equipment Operations will drive better results. Profitability at Financial Services and at CNH's joint ventures is expected to remain in line with 2005. The benefit of the improvement at Equipment Operations will be partially offset by another increase in CNH's effective tax rate.

CNH has recently undertaken a thorough and comprehensive review of its global operations designed to close its performance gap to best-in-class industry competitors. It has designed and is in the process of implementing a three-year plan to achieve this objective. As a result, CNH anticipates net income before restructuring for 2006 will improve compared to the prior year, but the full benefit of this plan will not be visible until 2008. In addition, full-year restructuring costs, net of tax, are expected to be slightly higher than in 2005, as CNH recognises the balance of the costs related to the planned manufacturing rationalisation in Europe. The company expects to contribute approximately US$120 million to its U.S. defined benefit pension plan in 2006. After considering this contribution, Equipment Operations expects to generate cash and to use that cash to further reduce its net debt by approximately $250 million, as compared with year-end 2005 levels.

CNH Case New Holland is a world leader in the agricultural and construction equipment businesses. Supported by 11,400 dealers in 160 countries, CNH brings together the knowledge and heritage of its Case and New Holland brand families with the strength and resources of its worldwide commercial, industrial, product support and finance organisations.