CNH Industrial beats earnings estimates, confirms outlook despite recession fears

Flags with the CNH Industrial logo are pictured outside the CNH Industrial building in Turin, Italy, February 5, 2020. REUTERS/ Massimo Pinca/File Photo

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  • Industrial business revenue hit $6.08 billion in Q2
  • Adjusted Industrial EBIT increased 14% to $654 million
  • The CO has confirmed its forecast for the financial year 2022
  • Completion of divestiture of non-core Raven businesses

MILAN, July 29 (Reuters) – Agricultural and construction machinery maker CNH Industrial (CNHI.MI) beat estimates on Friday with a 14% rise in second-quarter industrial operating profit and confirmed its outlook for the whole year despite the forecast of a global recession.

“Whether we will face a global recession in 2023 is up for debate, but we are preparing for that eventuality,” Chief Executive Scott Wine told analysts on a post-earnings conference call.

The Italian-American company, whose brands include Case IH, Steyr and New Holland, said adjusted earnings before interest and tax (EBIT) from the industrial business reached $654 million in the April-June period, topping the $605 million projected in a compiled analyst poll. by Reuters.

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“Prices, volumes and a favorable mix offset the significant cost escalation,” Wine said.

He warned of “a decidedly less favorable climate for the coming quarters”, but said the group expected to meet its full-year forecast of an increase in its turnover from industrial activities between 10 and 14% and a free cash flow of more than 1 billion dollars.

As of 1520 GMT, the group’s shares listed in Milan were up 5.6%, among the best performers in the Italian blue chip index (.FTMIB).

Wine cited the impact of the strong US dollar on commodity prices, with a potential further deterioration in sentiment and farmer incomes, and a possible drop in European industrial demand due to the war in Ukraine, risks energy and inflation.

However, he added, there were signs that the supply chain crisis was easing.

“Rising raw material, labor and freight costs are sadly familiar to us, but we are finally starting to see signs of their impact diminishing,” he said.

Wine also said CNH this week completed the sale of Aerostar, the aerospace and defense solutions business of its U.S. Raven unit.

In a separate statement, Maryland-based TCOM Holdings announced the purchase of Aerostar later Friday.

Financial details of the transaction were not disclosed.

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Reporting by Giulio Piovaccari; Editing by David Holmes and Keith Weir

Our standards: The Thomson Reuters Trust Principles.

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