Milan | Reuters — Farm and construction equipment maker CNH Industrial on Friday raised its full-year revenue forecast as operating profit topped expectations in the first quarter, aided by a strong order backlog and resilient demand for its large tractors.
The company increased its revenue outlook for industrial activities to between eight and 11 per cent this year, versus a previous forecast of between six and 10 per cent.
Farmers’ solid income cushioned profits even as commodity prices came down from their peaks a year ago. Growers were able to cash in on still-elevated wheat and soybean prices, which fueled purchases for new and used machinery, CNH CEO Scott Wine said.
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CNH’s farm equipment brands include Case IH, New Holland, Steyr and Flexi-Coil.
“The high-horsepower and cash crop markets continue to be very strong,” Wine said in an interview, adding that the company is planning to accelerate production of large ag equipment to catch up on volume output that was reduced during an eight-month long United Auto Workers strike.
Like competitors Deere and Caterpillar, CNH’s profit margins were propped up by price increases across its machinery businesses to offset inflated input costs and a choppy supply chain.
Analysts believe the manufacturer’s double-digit price hikes that contributed to a 16 per cent increase in net sales on the year for its agriculture division will sustain the company’s margin growth in the coming quarters, said Eric Greaser, vice-president at Moody’s.
Industrial activity revenues increased 21 per cent in 2022.
CNH’s first-quarter adjusted earnings before interest and tax (EBIT) for industrial activities rose 29 per cent to US$555 million, just ahead of analysts’ consensus forecast in a Reuters poll. Revenue was in line with expectations at US$4.78 billion.
Company executives said they were confident the company would complete its delisting from the Milan bourse by the end of the year and keep its shares trading only in New York.
— Reporting for Reuters by Giulio Piovaccari in Milan and Bianca Flowers in Chicago.
