Higher prices and North American demand bolster CNH Industrial’s quarterly construction sales
By Neil Gerrard01 August 2023
CNH Industrial’s net sales of construction equipment passed the $1 billion mark for the first time in a single quarter, in Q2 of 2023.
The company said the 19% year-on-year increase in revenue from construction equipment sales during the period was down to “favourable price realization and positive volume/mix mainly in North America”.
The performance was partially offset by lower net sales from South America.
CNH Industrial said that global industry volume for construction equipment was down 9% year over year in the second quarter for heavy construction equipment.
Light construction equipment was flat year over year.
Aggregated demand increased 8% in North America, was flat in Europe, Middle East and Africa (EMEA) and fell 16% in South America. It also dropped by 13% in Asia Pacific. Excluding China, demand in the Asia Pacific markets dropped 3%.
Meanwhile, CNH Industrial’s gross profit margin was 16% in construction, up two percentage points compared to the same period a year ago.
That was mainly due to higher volume and favourable price realisation offset by higher raw material costs and manufacturing costs, the company said.
CNH Industrial’s adjusted earnings before interest and tax (EBIT) increased by $38 million over the period. Adjusted EBIT margin was 6.8%.
Its consolidated revenue for the whole business was $6.6 billion in Q2 2023, with net income of $710 million.
The company forecast a net sales increase of between 8% and 11% for the full year, while it expected its selling, general and administrative expenses (SG&A) to increase by no more than 5% over 2022.
Chief executive Scott W. Wine said, “The CNH Industrial team delivered great results in Q2 as we capitalised on favourable market fundamentals and solid operational execution. Our Agriculture segment set margin records, and for the first quarter in our history, Construction net sales surpassed $1 billion.”