CNH Global today posted a 24-percent net sales increase for the second quarter ended June 30, at $4.88 billion, compared to $3.93 billion for the same period a year ago, with higher demand for equipment in the construction market with higher comparative demand in every region, as well as favorable conditions in the agricultural market. Equipment operations posted an operating profit of $521 million as a result of higher revenues, increased industrial utilization and improved product pricing.
Net equipment sales for the quarter were 79 percent agricultural equipment and 21 percent construction. The North American market provided 42 percent of the income; 35 percent EAME and CIS; 15 percent Latin America and 8 percent from Asia-Pacific markets.
Company officials said demand in the agricultural and construction markets is expected to remain firm for the balance of 2011. For the full year, the company expects construction equipment demand to increase 25 to 30 percent, and 5 to 10 percent for agricultural equipment. The CNG Group is upgrading its full-year revenue target at 15 to 20 percent, with an operating margin at the upper end of its previously disclosed range of 7.1 percent to 7.9 percent.
Global construction equipment industry unit sales jumped 24 percent in the second quarter. Net sales leapt 30 percent from $1.03 billion compared with $790 million in the year-ago quarter. Light equipment rose 29 percent and heavy equipment jumped 20 percent. North American demand rose 37 percent for both light and heavy equipment, while EAME and CIS markets increased 33 percent as the industry rebuilt from low levels in 2010. In Latin America, the market increased 27 percent, driven by strong demand from projects in the public and private sectors.
Operating profit for CNH Construction Equipment improved 92 percent for the quarter to $25 million as a result of unit demand of newly launched products in the light and heavy equipment segments, increased industrial utilization, and positive comparative pricing. The positive results more than offset the impact of tight supply conditions of Japanese-supplied components and whole goods during the quarter. CNH expects this situation to improve over the course of the year.
During the quarter, on April 26, CNH announced plans to set up a local manufacturing facility in Cordoba, Argentina, for the production of combines and tractors for the Latin American market.
CNH’s net sales in the agricultural equipment sector increased 22 percent for the quarter, from $3.15 billion in last year’s second quarter to $3.85 billion this year. Worldwide agricultural industry unit sales increased 13 percent compared to the second quarter of 2010.
CNH Financial Services posted a net income increase of 58 percent, from $33 million in Q210 to $52 million in the just-concluded quarter. Financial Services generated improved financial margins on a higher average portfolio as a result of increased industrial unit sales and improved funding costs.
CNH Global is based in Burr Ridge, Ill.
