CNH Industrial forecasts 2014 improvements in construction

Manufacturer CNH Industrial has forecast improvements in its construction sales for 2014, despite the fact that the business reported a trading loss for 2013.

The company’s agricultural and construction division – which manages the equipment brands New Holland and Case – recorded stable results as a whole for 2013, as strong demand for agricultural equipment was offset by challenges faced by the construction equipment business.

Combined agricultural and construction revenues totalled €16 billion for 2013, in line with the 2012 figure. The division’s trading profit for last year totalled €1.78 billion, up 15% compared to the previous 12 months.

However, CNH Industrial said the net contribution from construction equipment to the division’s revenues was down 16.4% year-on-year in 2013. It said continued weakness in most geographic regions was only partially offset by strength in Latin America.

And it was a similar picture with the trading profit, where the construction equipment unit reported a trading loss of €83 million thanks to lower volumes. This was deeper than the €30 million trading loss reported from construction in 2012.

CNH Industrial said its worldwide construction equipment market share was substantially flat for both heavy and light equipment. It added that global construction equipment production was 4% below retail sales for 2013, reflecting actions taken in the fourth quarter to realign its dealer inventories to retail demand.

Looking ahead, the company forecast improvements in the operating performance of its construction equipment business. It said it would also continue to focus on industrial efficiencies.

The company reported group revenues of €25.8 billion for 2013, in line with the figure for 2012 but up 4.3% year-on-year on a constant currency basis. Group trading profit totalled €1.98 billion last year, down 78% compared to 2012 but stable year-on-year on a constant currency basis.

For next year, the group said it expected revenues to range from flat year-on-year to a 5% increase, with a trading margin of between 7.8% and 8.2%.