{"id":29308,"date":"2022-07-29T16:41:20","date_gmt":"2022-07-29T11:41:20","guid":{"rendered":"https:\/\/pr.asianetpakistan.com\/?p=95753"},"modified":"2022-07-29T16:41:20","modified_gmt":"2022-07-29T11:41:20","slug":"cnh-industrial-reports-strong-second-quarter-performance","status":"publish","type":"post","link":"https:\/\/myanmarnewsgazette.com\/cnh-industrial-reports-strong-second-quarter-performance\/","title":{"rendered":"CNH Industrial reports strong second quarter performance"},"content":{"rendered":"
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Record consolidated revenues of $6,082 million (up 17.5% compared to Q2 2021 for continuing operations, up 20% at constant currency) <\/strong><\/p>\nNet income of $552 million, Adjusted Net Income of $583 million, with adjusted diluted EPS of $0.43 <\/strong><\/p>\nAdjusted EBIT of Industrial Activities of $654 million (up $82 million compared to Q2 2021)<\/strong><\/p>\nFree cash flow generation of $404 million (Industrial Activities)<\/strong><\/p>\nBoard approved additional $300 million share buy-back program<\/strong><\/p>\nFinancial results presented under U.S. GAAP<\/em><\/p>\n\u201cOur robust second quarter results highlighted the CNH Industrial team\u2019s focus on execution, as they excelled in both tactically ensuring we continued to meet customer commitments and making notable progress on our strategic initiatives. These considerations and strong price realization contributed to our impressive sales and adjusted diluted EPS growth, up 17.5% and 16.2% respectively. Pricing, volumes, and favorable mix offset significant cost escalation and gross profit increased $174 million year over year. Component shortages again impacted production, resulting in Free Cash Flow of $404 million which, though a tremendous sequential improvement, was still down almost 50% versus Q2 2021. Despite this, we continue to expect to deliver more than $1 billion of free cash flow for 2022. <\/em><\/p>\nLooking forward, we have exciting new products to unveil at the upcoming trade shows and our Tech Day late in the year. Raven and our Precision team are making great strides and helping to drive Agriculture\u2019s growth, and Construction Equipment, bolstered by Sampierana, is significantly increasing its profitability. With this ever-stronger foundation, we expect to meet our Full Year guidance, but anticipate a decidedly less advantageous climate for the next several quarters. The strengthening US dollar is impacting soft commodity prices, risking further deterioration in farmer sentiment and income, while we see the likelihood of declining European industrial demand due to the war in Ukraine, energy risk and inflation. In the Americas, steady demand from cash crop customers indicates that the market may be more stable, but overall we are positioning for a recession. Our team has proven that, regardless of the environment, they will continue to execute our strategic priorities and deliver for our customers and shareholders.\u201d<\/em><\/p>\n\u00a0\u00a0\u00a0 Scott W. Wine<\/strong>, Chief Executive Officer<\/strong><\/p>\n2022 Second Quarter Results<\/strong><\/p>\n(all amounts $ million, comparison vs Q2 2021 continuing operations – unless otherwise stated)<\/p>\n
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\n\n\nUS-GAAP<\/strong><\/td>\n<\/td>\n | <\/td>\n | Q2 2022<\/strong><\/td>\n<\/td>\n | PY<\/strong>(<\/strong><\/sup>1)<\/strong><\/sup><\/td>\n<\/td>\n | Change<\/strong><\/td>\nChange at c.c.<\/strong>(<\/strong><\/sup>3<\/strong><\/sup>)<\/strong><\/sup><\/td>\nConsolidated revenue<\/td>\n | <\/td>\n | 6,082<\/strong><\/td>\n<\/td>\n | 5,174<\/td>\n | <\/td>\n | +17.5%<\/td>\n | +20%<\/td>\n | of which Net sales of Industrial Activities<\/td>\n | <\/td>\n | 5,613<\/strong><\/td>\n<\/td>\n | 4,778<\/td>\n | <\/td>\n | +17.5%<\/td>\n | +20%<\/td>\n | Net income<\/td>\n | <\/td>\n | 552<\/strong><\/td>\n<\/td>\n | 514<\/td>\n | <\/td>\n | +38<\/td>\n | <\/td>\n | Diluted EPS $<\/td>\n | <\/td>\n | 0.40<\/strong><\/td>\n<\/td>\n | 0.38<\/td>\n | <\/td>\n | +0.02<\/td>\n | <\/td>\n | Cash flow from operating activities<\/td>\n | <\/td>\n | (271)<\/strong><\/td>\n<\/td>\n | 560<\/td>\n | <\/td>\n | (831)<\/td>\n | <\/td>\n | Cash and cash equivalents(<\/sup>6)<\/sup><\/td>\n<\/td>\n | 2,855<\/strong><\/td>\n<\/td>\n | 3,219<\/td>\n | <\/td>\n | (364)<\/td>\n | <\/td>\n | Gross profit margin of Industrial Activities<\/td>\n | <\/td>\n | 22.0%<\/strong><\/td>\n<\/td>\n | 22.2%<\/td>\n | <\/td>\n | -20bps<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | NON-GAAP<\/strong>(<\/strong><\/sup>2)<\/strong><\/sup><\/td>\n<\/td>\n | <\/td>\n | Q2 2022<\/strong><\/td>\n<\/td>\n | PY<\/strong>(<\/strong><\/sup>1)<\/strong><\/sup><\/td>\n<\/td>\n | Change<\/strong><\/td>\n<\/td>\n | Adjusted EBIT of Industrial Activities<\/td>\n | <\/td>\n | 654<\/strong><\/td>\n<\/td>\n | 572<\/td>\n | <\/td>\n | +82<\/td>\n | <\/td>\n | Adjusted EBIT Margin of Industrial Activities<\/td>\n | <\/td>\n | 11.7%<\/strong><\/td>\n<\/td>\n | 12.0%<\/td>\n | <\/td>\n | -30bps<\/td>\n | <\/td>\n | Adjusted net income<\/td>\n | <\/td>\n | 583<\/strong><\/td>\n<\/td>\n | 507<\/td>\n | <\/td>\n | +76<\/td>\n | <\/td>\n | Adjusted diluted EPS $<\/td>\n | <\/td>\n | 0.43<\/strong><\/td>\n<\/td>\n | 0.37<\/td>\n | <\/td>\n | +0.06<\/td>\n | <\/td>\n | Free Cash flow of Industrial Activities<\/td>\n | <\/td>\n | 404<\/strong><\/td>\n<\/td>\n | 785<\/td>\n | <\/td>\n | (381)<\/td>\n | <\/td>\n | Available liquidity(<\/sup>6)<\/sup><\/td>\n<\/td>\n | 8,795<\/strong><\/td>\n<\/td>\n | 9,399<\/td>\n | <\/td>\n | (604)<\/td>\n | <\/td>\n | Adjusted gross margin of Industrial Activities<\/td>\n | <\/td>\n | 22.0%<\/strong><\/td>\n<\/td>\n | 22.2%<\/td>\n | <\/td>\n | -20bps<\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Net sales of Industrial Activities<\/strong> of $5,613 million<\/strong>, up 17.5% mainly due to favorable price realization, offsetting almost 3% adverse currency conversion.<\/p>\nAdjusted EBIT of Industrial Activities<\/strong> of $654 million<\/strong> ($572 million in Q2 2021), with both segments up year over year. Agriculture adjusted EBIT margin at 14% and Construction at 3.8%.<\/p>\nAdjusted net income<\/strong> of $583 million<\/strong>, with adjusted diluted earnings per share<\/strong> of $0.43<\/strong> (adjusted net income of $507 million in Q2 2021, with adjusted diluted earnings per share of $0.37).<\/p>\nGross profit margin of Industrial Activities<\/strong> of 22.0%, (22.2% in Q2 2021) with improvement in Construction despite continued cost pressures.<\/p>\nReported income tax expense of $228 million and adjusted income tax expense(<\/sup>1)<\/sup> of $185 million, with adjusted effective tax rate<\/strong> (adjusted ETR(1)<\/sup>) of 25.0%<\/strong>,<\/p>\nFree cash flow of Industrial Activities<\/strong> was $404 million<\/strong>. Manufacturing inventories remain high, amid supply chain constraints, while finished goods inventories are lean relative to sales. Total Debt of $20.8 billion at June 30, 2022 ($20.9 billion at December 31, 2021).<\/p>\nIndustrial Activities Net Debt<\/strong>(<\/strong><\/sup>1)<\/strong><\/sup> position at $1.6 billion<\/strong>, an increase of $438 million from December 31, 2021.<\/p>\nAvailable liquidity<\/strong> at $8,795 million as of June 30, 2022. In April, CNH Industrial Capital LLC’s 4.375% $500 million notes matured. In May, CNH Industrial Capital LLC issued a 3.950% $500 million notes due in 2025. In May, CNH Industrial paid \u20ac379 million (~$412 million) in dividends to shareholders. During the quarter, CNH Industrial received proceeds of $350 million for the sale of the Raven Engineered Films Division.<\/p>\nThe Board of Directors approved a $300 million share buyback program to be launched at the completion of the existing $100 million program.<\/p>\n \n\n\nAgriculture<\/strong><\/td>\n<\/tr>\n\n<\/td>\n | <\/td>\n | Q2 2022<\/strong><\/td>\n<\/td>\n | Q2 2021<\/strong>(1)<\/strong><\/sup><\/td>\n<\/td>\n | Change<\/strong><\/td>\n<\/td>\n | Change at c.c.<\/strong>(<\/strong><\/sup>3)<\/strong><\/sup><\/td>\n<\/tr>\n\nNet sales ($ million)<\/td>\n | <\/td>\n | 4,722<\/strong><\/td>\n<\/td>\n | 3,970<\/td>\n | <\/td>\n | +19%<\/td>\n | <\/td>\n | +22%<\/td>\n<\/tr>\n | \nAdjusted EBIT ($ million)<\/td>\n | <\/td>\n | 663<\/strong><\/td>\n<\/td>\n | 582<\/td>\n | <\/td>\n | +81<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \nAdjusted EBIT margin<\/td>\n | <\/td>\n | 14.0%<\/strong><\/td>\n<\/td>\n | 14.7%<\/td>\n | <\/td>\n | -70 bps<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n In North America, industry volume was flat for tractors over 140 HP and was down 16% for tractors under 140 HP; combines were up 3%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 1% and 24%, respectively, with combine demand up when excluding Turkey and Russia. South America tractor demand was up 4% and combine demand was down 14%. Asia Pacific tractor demand was up 11% and combine demand was up 21%.<\/p>\n Net sales<\/strong> were up 19%, due to favorable price realization and better mix, mostly driven by North America and South America.<\/p>\nGross profit margin<\/strong> was 23.4%, with Gross Profit $150 million higher than in Q2 2021, mainly due to better mix and favorable price realization primarily in North America and South America, partially offset by higher production and raw material costs across all regions.<\/p>\nAdjusted EBIT<\/strong> was $663 million ($582 million for Q2 2021), with Adjusted EBIT margin at 14.0%. The $81 million increase was driven by higher gross profit, partially offset by higher SG&A costs, and increased R&D spend.<\/p>\nOrder book in Agriculture<\/strong> was up almost 5% year over year for tractors. Order book for combines was down almost 6%, with declines in North America and South America offset partially by growth in EMEA. At more than 3 times the pre-pandemic levels, order books remain strong in all regions and key products, with the company accepting orders only through Q1 2023 in most regions as cost uncertainties remain.<\/p>\n\n\n\nConstruction<\/strong><\/td>\n<\/tr>\n\n<\/td>\n | <\/td>\n | Q2 2022<\/strong><\/td>\n<\/td>\n | Q2 2021<\/strong>(1)<\/strong><\/sup><\/td>\n<\/td>\n | Change<\/strong><\/td>\n<\/td>\n | Change at c.c.<\/strong>(<\/strong><\/sup>3<\/strong><\/sup>)<\/strong><\/sup><\/td>\n<\/tr>\n\nNet sales ($ million)<\/td>\n | <\/td>\n | 891<\/strong><\/td>\n<\/td>\n | 808<\/td>\n | <\/td>\n | +10%<\/td>\n | <\/td>\n | +12%<\/td>\n<\/tr>\n | \nAdjusted EBIT ($ million)<\/td>\n | <\/td>\n | 34<\/strong><\/td>\n<\/td>\n | 24<\/td>\n | <\/td>\n | +10<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \nAdjusted EBIT margin<\/td>\n | <\/td>\n | 3.8%<\/strong><\/td>\n<\/td>\n | 3.0%<\/td>\n | <\/td>\n | +80 bps<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Global industry volume for construction equipment decreased in both Heavy and Light sub-segments, with Heavy down 18% and Light down 12%, mostly driven by a 29% decrease in Light and Heavy equipment demand for Asia Pacific, particularly in China. Demand decreased 3% in North America, 3% in EMEA and increased 22% in South America.<\/p>\n Net sales <\/strong>were up 10%, driven by price realization and contribution from the Sampierana business, partially offset by lower volume in all regions except South America.<\/p>\nGross profit margin<\/strong> was 13.8%, up 1.4% compared to Q2 2021, mainly due to higher volumes and favorable price realization, partially offset by unfavorable fixed costs absorption and higher freight and raw material costs.<\/p>\nAdjusted EBIT<\/strong> increased $10 million due to favorable volume and mix and positive price realization, partially offset by higher freight and raw material costs and increased SG&A spend. Adjusted EBIT margin at 3.8%.<\/p>\nConstruction order book<\/strong> up more than 20% year over year in both Heavy and Light sub-segments, with increases in the North America, EMEA and South America regions.<\/p>\n\n\n\nFinancial Services<\/strong><\/td>\n<\/tr>\n\n<\/td>\n | <\/td>\n | Q2 2022<\/strong><\/td>\n<\/td>\n | Q2 2021<\/strong>(1)<\/strong><\/sup><\/td>\n<\/td>\n | Change<\/strong><\/td>\n<\/td>\n | Change at c.c.<\/strong>(<\/strong><\/sup>3<\/strong><\/sup>)<\/strong><\/sup><\/td>\n<\/tr>\n\nRevenue ($ million)<\/td>\n | <\/td>\n | 471<\/strong><\/td>\n<\/td>\n | 392<\/td>\n | <\/td>\n | +20%<\/td>\n | <\/td>\n | +20%<\/td>\n<\/tr>\n | \nNet income ($ million)<\/td>\n | <\/td>\n | 95<\/strong><\/td>\n<\/td>\n | 85<\/td>\n | <\/td>\n | +10<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \nEquity at quarter-end ($ million)<\/td>\n | <\/td>\n | 2,211<\/strong><\/td>\n<\/td>\n | 2,185<\/td>\n | <\/td>\n | +26<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \nRetail loan originations ($ million)<\/td>\n | <\/td>\n | 2,440<\/strong><\/td>\n<\/td>\n | 2,407<\/td>\n | <\/td>\n | +1.4%<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Revenues <\/strong>were up 20% due to higher used equipment sales, higher base rates in South America and higher average portfolios in all regions, partially offset by lower average retail yields in North America.<\/p>\nNet income <\/strong>increased $10 million to $95 million, primarily as a result of higher recoveries on used equipment sales, higher base rates in South America, and higher average portfolios in all regions, offset by increased income taxes and unfavorable risk costs.<\/p>\nThe managed portfolio<\/strong> (including unconsolidated joint ventures) was $21.1 billion as of June 30, 2022 (of which retail was 70% and wholesale 30%), up $0.6 billion compared to June 30, 2021 (up $1.7 billion on a constant currency basis).<\/p>\nThe receivable balance greater than 30 days past due<\/strong> as a percentage of receivables was 1.5% (1.5% as of June 30, 2021).<\/p>\n2022 Outlook<\/strong><\/p>\nThe Company is substantially confirming the following 2022 outlook for its Industrial Activities<\/strong>:<\/p>\n | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |