CNH Industrial's construction equipment net sales decreased 19.6 percent for Q2 2016 compared to the same period in 2015, due to negative industry volumes primarily in the heavy product class in all regions.
Operating profit was $17 million for the Q2 2016 ($35 million in the second quarter 2015). Operating margin decreased 1.8 percentage points to 2.9 percent as a result of lower volumes in NAFTA and negative industrial absorption partially offset by lower product cost and other cost-containment actions. Second-quarter production was 13 percent lower than the previous year to balance channel inventory with current demand conditions.
Overall, CNH Industrial had consolidated revenues of $6,753 million for Q2 2016, down 2.9 percent compared to the Q2 2015. Net sales of Industrial Activities were $6,450 million in Q2 2016, down 2.8 percent compared to the same period in 2015. Reported net income was $129 million in the second quarter, which includes an additional non-tax deductible charge of $49 million following finalization of the European Commission settlement on the truck competition investigation. Adjusted net income was $216 million for the quarter.
Operating profit of Industrial Activities was $453 million for the second quarter, a $52 million increase compared to the same period in 2015, with an operating margin of 7.0 percent, up 1 percentage point compared to the Q2 2015. “Our second quarter results were solid; we continued to demonstrate our ability to execute across the breadth of our business and geographic portfolio despite the large disparity of demand conditions prevalent in the capital goods sector,” said Richard Tobin, CEO of CNH Industrial. “Our ability to increase operating profit in the Agricultural Equipment segment and our trend of improved results in Commercial Vehicles solidify our belief that the benefits of our efficiency plan on product cost and quality are taking hold.”