Ag equipment leads third quarter growth for CNH
Nov 04, 2012 (Menafn - The Hawk Eye - McClatchy-Tribune Information Services via COMTEX) --BURR RIDGE, Ill. -- CNH Global N.V. announced Wednesday positive financial results for the quarter ended Sept. 30.
Net sales for the quarter increased 5 percent to 4.8 billion as global demand for agricultural equipment remained solid, driven by high commodity prices offsetting the effects of a severe drought in North America. Strong agricultural equipment sales more than offset the reduction in sales of construction equipment due to challenging market conditions in most geographies and the negative effects of foreign currency translation.
Equipment Operations posted a gross profit of 988 million, or 20.4 percent of net sales for the third quarter, and an operating profit of 464 million, as higher agricultural equipment revenues and positive net pricing in both segments compensated for increased SG&A expenditures and R&D expense as a result of significant investments in new products and Tier 4 engine emissions compliance programs and the negative impact from foreign exchange.
Equipment net sales during the quarter were 83 percent agricultural equipment and 17 percent construction equipment. The geographical distribution of net sales in the quarter was 46 percent North America, 27 percent European-African-Middle Eastern & Commonwealth of Independent States, 15 percent Latin America, and 12 percent Asia-Pacific markets.
Equipment Operations generated 450 million in cash flow from operations on a year-to-date basis, a 15 percent increase over the prior year, as improved net sales and operating performance more than offset the increased net working capital needed to support increased business activity. Year-to-date capital expenditures totaled 334 million, a 53 percent increase from the comparable 2011 period, largely as a result of investments in new manufacturing sites and product launches in both the agricultural and construction equipment segments. New product development and production capacity represented 71 percent of the total capital expenditures spent through the third quarter. The group expects full year capital expenditures and R&D investment of approximately 1 billion.
CNH's Equipment Operations ended the period with a net cash position of 2.9 billion. The 31 percent effective tax rate for the third quarter is lower than the group's full-year 2012 forecast effective tax rate of 32 percent to 35 percent, due primarily to the geographic mix of earnings that resulted in better utilization of the group's tax attributes.
For the quarter, net income, before restructuring and exceptional items, was 323 million, an increase of 19 percent, driven by continued solid market conditions in the agricultural sector, satisfactory industrial performance, and improved results by the group's financial services business, largely driven by lower provision for credit losses and higher average portfolio, offsetting the increased costs of research and development and the negative currency translation in the period. This resulted in the group generating diluted earnings per share of 1.34, up 19 percent compared to 1.13 per share in the comparable period of 2011.
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