CNH Global N.V. last week reported a second-quarter 2009 net loss of $67 million compared with net income of $347 million in the same period of 2008. The company’s second-quarter 2009 diluted net loss per share was $0.28 compared with earnings of $1.46 in the second quarter of 2008. These results include restructuring charges, after tax, of $52 million, compared with $4 million in the prior year.
In the first half of 2009, CNH’s diluted net loss per share was $0.81 compared with earnings of $1.93 in the first half of 2008. The net loss for the first six months of 2009 was $193 compared with net income of $459 million in the same period of 2008. Results include restructuring charges, after tax, of $53 million compared with $18 million in the first half of 2008
“In the second quarter of 2009, we continued taking actions to ensure that the company emerges from the current economic environment in a position of strength, ready to compete aggressively when market conditions improve,” said Harold Boyanovsky, CNH president and CEO. “We maintained a tight grip on costs and production overall, reducing equipment operations inventories and receivables by $918 million and reducing permanent and temporary salaried and agency positions by 7 percent so far this year. On the construction side, we began remodeling the company’s organization to better fit the new realities of the construction equipment market and initiated actions to rationalize our industrial footprint.
“In terms of this quarter’s results, we have now experienced almost a full year of significant global economic pressures with inevitable negative consequences for capital equipment markets and industry sales in both construction and agricultural equipment, with corresponding negative impacts on our net sales and operating profit. This, combined with the restructuring measures implemented during the quarter, resulted in a net loss for the quarter.”
Construction Equipment net sales declined 62 percent in the quarter, and were down 58 percent on a constant currency basis. Worldwide construction equipment industry retail unit sales declined approximately 47 percent, with industry retail unit sales of light construction equipment, where CNH has a stronger market position, down approximately 52 percent and industry retail unit sales of heavy equipment down 40 percent. CNH idled much of its construction equipment production capacity for the quarter to reduce inventories and destock dealers, under-producing retail unit sales by 52 percent. Destocking of dealers and distributors accounted for approximately 8 percent of the decline in net sales of construction equipment in the quarter. Industry retail unit sales declines were greatest in the Latin American and Western European markets during the quarter, declining 64 and 60 percent respectively.
Construction Equipment net sales for the half declined 61 percent, and were down 57 percent on a constant currency basis. For the half, worldwide construction equipment industry retail unit sales declined 49 percent, with industry retail unit sales of light construction equipment down 55 percent and industry retail unit sales of heavy construction equipment down 42 percent.
CNH’s gross profit in the second quarter was $525 million compared with $1.06 billion in the second quarter of 2008. For the first half of 2009, gross profit was $950 million compared with $1.76 billion in the first half of 2008.
CNH Financial Services’ on-book asset portfolio totaled $9.0 billion at June 30, down 27 percent from the prior year and down from $9.8 billion at year-end 2008, primarily due to public and private securitization transactions, as well as loan originations. Second-quarter net income of $45 million was down $25 million from a year ago, reflecting primarily lower average levels of on-book receivables and increased provisions for losses.
For the first half, Financial Services’ net income was $46 million, down from $122 million in the prior year. First-half 2009 loss provisions were $81 million compared with $43 million in the prior year.
The company said it expects weakness in global construction equipment industry retail unit sales to continue at levels close to those experienced in the first half of the year, with full-year industry retail unit sales down 45 to 50 percent compared with full-year 2008, and it anticipates that light equipment markets, where CNH has a stronger presence, will decline by approximately 50 percent, with the heavy equipment markets declining by approximately 45 percent. CNH expects declines to occur in all major markets, with the most significant declines in the Western European and American markets.
For the third quarter of 2009, CNH said it expects global construction equipment industry retail unit sales to be down 50 to 55 percent compared with the third quarter of 2008. It expects that industry retail unit sales of light construction equipment will be down 45 to 50 percent, with heavy construction equipment sales down approximately 55 percent.
CNH expects equipment operations net sales for full-year 2009 to be down 25 to 30 percent from 2008, including a reduction of approximately 5 percent related to currency translation, following the trend of the first half of the year.
CNH Global N.V. is a world leader in the agricultural and construction equipment businesses. Supported by 11,300 dealers in 170 countries, CNH is composed of its Case and New Holland brand families, as well as its worldwide commercial, industrial, product support and finance organizations.