CNH Delaying Spin-Off

06 May 2020

As part of its first quarter 2020 financial results announcement, CNH Industrial said that the original timeline for implementation of its new Transform2Win strategy, announced on Wall Street last September, that included the spin-off of the company’s on-highway activities, will be “extended” because of current market conditions.

The full first quarter announcement can be viewed here.

Among other items of specific interest in the Q1 announcement are the following.

The company’s Powertrain operations had net sales of $753 million in the first quarter of 2020, down 27% compared to the first quarter of 2019 (down 25% on a constant currency), due to lower sales volume mainly in Europe and Rest of World as a consequence of COVID-19. Sales to external customers accounted for 44% of total net sales (47% in the first quarter of 2019), with 27% captive volume reduction, and 33% non-captive volume reduction.

In the first quarter of 2020 adjusted EBIT was $31 million, a $65 million decrease compared to the first quarter of 2019, mainly due to unfavorable volume and mix, partially offset by positive price realization and product cost efficiencies. Adjusted EBIT margin was 4.1% (9.3% in the first quarter of 2019), CNH said.

In other market segments, worldwide agriculture industry demand was down during the first quarter of 2020, with global demand for tractors down 15% and combines down 11%. The demand slowdown for tractors in the month of March alone was some 36%. In North America, tractor demand was down 9% in the quarter, primarily in the lower horsepower segment (under 140 hp), while combines were down 22%. In Europe, tractor and combine markets were down 10% and 20%, respectively, with tractors down 24% in the month of March alone. South America tractor and combine markets decreased 6% and 30%, respectively. In Rest of World, demand decreased 17% for tractors and 2% for combines, with the tractor market slowdown of 43% in the month of March alone.

In the first quarter of 2020, demand in all sub-segments of construction end-markets were showing double-digit declines in all geographies, with the exception of South America where compact and service equipment was down only 1%, while general construction equipment road building and site preparation equipment were up 12% and 13%, respectively.


The European truck market was down 19% year-over-year in the first quarter, with light duty trucks down 14%, and medium and heavy trucks down 27%, with industry sales of light duty trucks and medium and heavy trucks declining 34% and 38%, respectively, in the month of March alone. The South America truck market was down 17% in light duty trucks and 6% in medium and heavy trucks, with the light duty truck market down 26% in the month of March alone. For buses, the European market decreased 9% in the quarter, with a 30% decline in the month of March alone, and the South American market decreased by 14%, with a 34% decrease in the month of March alone.

“At this point in time it is not possible to forecast future short and longer term demand in our key markets,” CNH said.

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