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CNH Global N.V. has reported second
quarter 2007 net income of $228 million, up 55 percent
compared to net income of $147 million in the second
quarter of 2006. This is its highest ever figure in
CNH's history. Results included restructuring charges,
net of tax, of $19 million in the second quarter of
2007, compared with $7 million in the second quarter of
2006. Net income excluding restructuring charges, net of
tax, was $247 million, up 60 percent compared to $154
million in the prior year. Second quarter diluted
earnings per share were $0.96, compared with $0.62 per
share in 2006. Before restructuring, net of tax, second
quarter diluted earnings were $1.04 per share, compared
with $0.65 per share in 2006.
First half 2007 net income of $323
million was up 70 percent compared to net income of $190
million in the first half of 2006. Results included
restructuring charges, net of tax, of $29 million in the
first half of 2007, compared with $10 million in the
first half of 2006. Net income excluding restructuring
charges, net of tax, was $352 million, up 76 percent
compared to $200 million in the prior year. First half
diluted earnings per share were $1.36, compared with
$0.81 per share in 2006. Before restructuring, net of
tax, first half diluted earnings were $1.48 per share,
compared with $0.85 per share in 2006.
“Our Equipment Operations gross
margin rose 0.7 percentage points compared with the
second quarter last year – our eighth consecutive
quarter of year-over-year gross margin improvement. Our
industrial operating margin rose 1.5 percentage points
to 10.8%, making it the best quarterly margin in CNH
history,” said Harold Boyanovsky, CNH President and
Chief Executive Officer. “Our stronger performance
reflects our revitalized brand, customer and quality
focus and stronger worldwide agricultural and
construction equipment industries. We are reaffirming
our industrial operating margin target of between 7.6%
and 8.4% for the full year.”
Highlights for the quarter include:
• Worldwide CNH retail unit volumes showed particular
strength in higher horsepower agricultural tractors and
combines, with increased agricultural industry demand in
all major markets outside of Western Europe.
• Worldwide Construction Equipment industry and CNH
retail unit sales up, with sales outside of North
America showing continued strength, more than
compensating for weaker industry unit sales in North
America.
• Higher economic-related cost increases, including key
commodities such as steel, cast iron, rubber and related
products, were offset by positive impacts of exchange
rate changes, driving another quarter of positive net
price recovery for both Agricultural and Construction
Equipment operations.
• Equipment Operations positive cash flow drove a $537
million reduction in Net Debt in the quarter, resulting
in a Net Cash position of $531 million at quarter-end.
• CNH’s improved industrial and financial performance,
its high cash balances, and the continuing support of
the Fiat Group led Case New Holland, Inc. to announce
the redemption of the full $1.05 billion aggregate
principal amount of its outstanding 9 ¼% Senior Notes
due 2011 on August 1, 2007, allowing CNH to improve its
balance sheet structure and better manage its liquidity.
• The American Society of Agricultural and Biological
Engineers (ASABE) recognized CNH with multiple awards
for the most innovative product designs to enter the
market in 2006. It cited Case IH for the Module Express
625 Cotton Harvester, the AFS Cotton Yield Monitor and
the Case IH SteigerR AccuSteerTM II System and New
Holland Agricultural Equipment for the SuperSuiteTM
Compact Tractor Cab,
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CNH anticipates that 2007 diluted earnings per
share, before restructuring, net of tax, should be
in the range of $2.30 to 2.45, compared with $1.53
for the full year 2006. |
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CNH Global has
reported second quarter 2007 net income of US$228 million,
up 55 percent on the second quarter of 2006 and the highest
in the Fiat Group-owned company's history. |
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New Holland FastSteerTM Steering
System, New Holland Flexicoil SD550 Air Hoe Drill and
Smart SieveTM Grain Cleaning System.
• New Holland Construction also received a Top 10 AE 50
award from the ASABE for its On-the-Go Two-Speed Shift
feature that gives operators of the Super Boom ™ L185
skid steer loader the ability to shift from high to low
range at the touch of a fingertip.
AGRICULTURAL EQUIPMENT MARKET
OUTLOOK
CNH expects U.S. net farm income in
2007 to be 15% higher than in 2006, bolstered by the
increased demand for corn for fuel ethanol. The North
American market for over 40 horsepower tractors
performed better than expected in the second quarter.
For the full year, CNH expects North American industry
retail sales of over-40 horsepower tractors to be up
slightly, compared with 2006, with sales of over 140
horsepower tractors up 10 to 15%. Industry sales of
under-40 horsepower tractors are expected to be lower
than in 2006. Industry retail unit sales of combines in
North America should be up.
Outside of North America, for the
full year, we continue to expect industry retail unit
sales of agricultural tractors to be flat to up
slightly, compared with 2006, with particular strength
in the Latin American market which is expected to be up
25 to 30%. Tractor industry unit sales in Rest-of-World
markets should be up as much as 5%, with sales in
Western Europe on par with 2006. Industry unit sales of
combines are expected to be up is all markets. In total, we expect the worldwide
agricultural tractor industry unit retail sales to be up
as much as 5% compared with 2006. Combine sales could
be up 10 to 15%, an improvement from our prior outlook.
CONSTRUCTION EQUIPMENT MARKET
OUTLOOK
For the full year, CNH expects North
American industry retail unit sales of both heavy and
light construction equipment to be down compared with
2006. North American industry sales of both heavy and
light construction equipment weakened in the second
quarter, as housing starts and activity levels continued
to decline. For the year, the company expects
both heavy and light construction equipment industry
retail unit sales outside of North America to be up,
more than offsetting the decline in North America.
Industry sales of heavy and light equipment are expected
to be up about 15% in Western Europe, and between 25 and
30% in Latin American and Rest of World markets.
Construction activity remains robust, supported by solid
GDP growth and stable used equipment prices. In total, CNH now expects worldwide
industry retail unit sales of both heavy and light
construction equipment to be up about 10%.
CNH OUTLOOK FOR FULL YEAR
2007
Based on these agricultural and
construction equipment market outlooks and the
initiatives undertaken in the last two years designed to
properly position our four main brands, CNH anticipates
that 2007 diluted earnings per share, before
restructuring, net of tax, should be in the range of
$2.30 to 2.45, compared with $1.53 for the full year
2006. Restructuring costs, net of tax, in
2007 are expected to be about $60 million primarily
related to previously announced actions.
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