On May 5, 2023, CNH Industrial reported first quarter consolidated revenues of $5,342 million (up 15% compared to Q1 2022) Net income of $486 million and Adjusted Net Income of $475 million, with diluted EPS and adjusted diluted EPS of $0.35 (adjusted diluted EPS of $0.28 in Q1 2022) Net cash used by operating activities of $701 million and Industrial Free Cash Flow absorption of $673 million Net sales for Industrial Activities of $4,776 million (up $596 million compared to Q1 2022) Net sales guidance for FY 2023 updated to an increase of 8-11% vs. 2022 on strong North America row crop demand, continued pricing strength and a solid order backlog
In a note to investors, Stanley Elliott, managing director with Stifel, said,"1Q23 results were above expectations helped by continued strength in pricing and large ag ... While the large ag demand outlook remains strong, CNHI also highlighted destocking in the small ag channel after demand and dealer inventories have rapidly normalized. Importantly, CNHI highlighted benefits from its strategic cost initiatives ramping into 2024 with 'hundreds of millions' of the $550 million total benefit expected to occur next year. We are maintaining our Hold rating, but remain pleased with CNHI’s commitment to precision ag investments. Most notably, this includes the recent acquisition of Augmenta which should accelerate smart sprayer commercialization, the most exciting and largest opportunity within precision ag, in our view."
Elliott also noted that CNH has hired over 500 tech engineers since its acquisition of Raven to further develop its precision ag offerings.
||Q1 2023||Q1 2022||Change|
|Net Sales ($ Millions)||3,927||3,377||+16%|
|Adjusted EBIT ($ Millions)||570||426||+144|
|Adjusted EBIT Margin||14.5%||12.6%||+190 bps|
In North America, industry volume was up 19% year over year in the first quarter 2023 for tractors over 140 HP and was down 16% for tractors under 140 HP; combines were up 116% from a severely disrupted industry in the first quarter of 2022. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 5% and up 7%, respectively, which included Europe tractor and combine demand down 2% and up 62%, respectively. South America tractor demand was down 6% and combine demand was up 16%. Asia Pacific tractor demand was up 6% and combine demand was down 3%. Agriculture net sales were up 16%, due to favorable price realization, higher volume and favorable mix. Gross profit margin was a record 26.2%. Favorable price realization across all regions, and higher volume and mix offset higher manufacturing and purchasing costs. Adjusted EBIT was $570 million ($426 million in Q1 2022), with Adjusted EBIT margin at 14.5%. The $144 million (or 1.9 p.p.) increase from Q1 2022 was mostly driven by gross margin improvement.
North American demand for row crop products is strong. Globally, pricing continues to be resilient, order backlog remains solid and well above 2019 levels. The Company is therefore updating the 2023 outlook for its Industrial Activities: • Net sales(4) up between 8% and 11% year on year including currency translation effects • SG&A up, no more than 5% vs 2022 • Free Cash Flow of Industrial Activities(6) between $1.3bn and $1.5bn • R&D expenses and capital expenditures at around $1.6bn.
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