CNH Posts 1-Percent Net Sales Jump as Construction Demand Drops

CNH Global posted a 1-percent increase in net sales for the first quarter to $4.7 billion, while its construction equipment division declined by 26 percent to $754 million. Agricultural equipment net sales increased 9 percent to $3.9 billion. Equipment operations, however, posted an operating profit of $443 million or 9.4 percent of net sales for the quarter, as increased volumes and positive net pricing in the agricultural segment compensated for the reduction in volume in the construction segment.

North America accounted for 44 percent of the company’s net sales, with 30 percent coming from Europe, Africa and the Middle East and CIS, 19 percent from Latin America and 7 percent from Asia Pacific.

In the construction segment, the company said demand slowed in every region with light equipment down 8 percent and heavy equipment down 23 percent in the quarter. In an effort to match inventory levels with forecasted demand, capacity utilization was reduced during the period. The reduction in revenue combined with lower fixed cost absorption in the period, resulted in an operating loss of $26 million for the quarter.

The company said its worldwide construction equipment market share was largely unchanged in aggregate, with gains in Latin America offset by a reduction in North America and other regions.

CNH’s financial services division posted a 23-percent year-over-year jump in net income to $90 million, compared with $73 million a year ago.