Case New Holland’s net sales of equipment dropped 25.5 percent in the first quarter of 2009, to $3.05 billion, compared with $4.1 billion for the first quarter in 2008. Sales of construction equipment plunged 59.1 percent from $1.17 billion in last year’s first quarter to $480 million in 2009, while agricultural equipment sales dropped 12.1 percent, from $2.92 billion in 2009 to $2.57 billion in the first quarter this year, a 12.1 percent drop.
CNH said it plans to invest about $250 million in the next 12 months to reduce costs and improve operating efficiency.
“CNH acted quickly to address fast-changing and difficult market conditions in the first quarter of 2009,” said Harold Boyanovsky, CNH president and CEO. “We continue to reduce construction production schedules around the world and slowed output of selected agricultural equipment products in response to market difficulties in the CIS and Latin American regions. Although this decision had a negative impact on earnings in the quarter, it was the correct decision in the current market conditions. At the same time we built inventory for specific agricultural segments to meet second-quarter demand. We anticipated a turbulent 2009 and expected the first quarter to be particularly challenging, and that certainly was the case.”
Boyanovsky said restructuring actions, starting in the second quarter, will be “designed to streamline the business, reinforce the product architectures and significantly reduce the costs associated with the management of the networks; while improving our brand value and customer support.”
With worldwide construction equipment industry retail unit sales down 57 percent and, retail sales of light equipment down 61 percent and sales of heavy construction down 50 percent, CNH’s unit production of heavy and light equipment was 80 percent of the first quarter of 2008.
Operating margins dropped 85 percent in the first quarter, from $264 million in last year’s first quarter, to $39 million this year. Operating margins on construction equipment dropped 413.8 percent to a $91 million loss, compared with a $29 million profit in the year-ago quarter. Margins on agricultural equipment dropped to $130 million in the first quarter, compared with $235 million a year ago, a 44.7-percent plunge.