CNH Industrial N.V. announced its fourth-quarter and full-year 2014 results, indicating a 2.7 percent increase in construction equipment sales for the year.
For the fourth quarter of 2014, the company reported consolidated revenues of $8.4 billion, down 10 percent compared to Q4 2013. The company reported consolidated revenues of $32.6 billion for 2014, down 3.8 percent compared to 2013.
Net sales for Construction Equipment were $3.3 billion in 2014, up 2.7 percent from 2013, due to positive pricing in North American Free Trade Agreement (NAFTA) and Latin America (LATAM) regions, along with positive volume and mix in NAFTA and Europe, the Middle East, and Africa (EMEA). This was partially offset by weakened activity in LATAM and Asia Pacific (APAC) regions. The geographic distribution of net sales for the year was 44 percent NAFTA, 20 percent EMEA, 27 percent LATAM and 9 percent APAC.
In 2014, worldwide heavy and light construction equipment industry sales were down 9 percent and up 5 percent, respectively, from the prior year. Industry heavy construction equipment sales were up in NAFTA and EMEA but decreased in LATAM and APAC. Industry light construction equipment sales were up in NAFTA and EMEA, flat in APAC and down considerably in LATAM.
Construction Equipment’s worldwide market share was in line with the market overall. For heavy construction equipment, market share increased in all regions. For light construction equipment, market share was down slightly in APAC and EMEA, while up in LATAM.
Construction Equipment reported operating profit of $79 million for 2014 compared to an operating loss of $97 million for 2013, with an operating margin of 2.4 percent, as a result of favorable pricing in NAFTA and LATAM, positive volume and mix in all regions and lower selling, general and administrative and R&D expenses.
CNH Industrial expects improved profitability in Commercial Vehicles and Construction Equipment, coupled with structural cost improvement measures from the company’s Efficiency Program now extended to Agricultural Equipment. These actions are expected to buffer, but not fully offset the negative impact from the continuation of challenging trading conditions in the row crop sector of the agricultural industry, and the impact of the recent significant appreciation of the U.S. dollar against the company’s other trading currencies, allowing the company to hold operating margin unless there are further currency deteriorations from the current rate levels outside the United States.
The company expects 2015 net sales of Industrial Activities of approximately $28 billion, with an operating margin of Industrial Activities between 6.1 percent and 6.4 percent. Net industrial debt at the end of 2015 is expected to be between $2.2 billion and $2.4 billion, with the expected cash generation during the year resulting primarily from inventory reduction in the Agricultural Equipment segment.