CNH Industrial N. V., parent company of the Case Construction Equipment and New Holland Construction brands, today announced consolidated revenues of $7,540 million for the first quarter 2014, in line with Q1 2013. Net sales of Industrial Activities were $7,213 million in Q1 2014, a 0.6% decrease compared to the prior year (+1.3% on a constant currency basis). Net of a 1.9% negative impact on currency translation, net sales increased in Construction Equipment and Powertrain, offsetting reduced net sales for Agricultural Equipment, primarily in Latin America (LATAM). Net sales for Commercial Vehicles were substantially flat compared to Q1 2013.
Operating profit of Industrial Activities was $412 million in Q1 2014, a 2.1% decrease compared to Q1 2013 (+3.3% on a constant currency basis) with an operating margin for the first quarter of 5.7%. Operating profit increases in Construction Equipment and Powertrain, together with margin improvements in Agriculture Equipment, were more than offset by the negative effects of challenging operating conditions in LATAM affecting Commercial Vehicles mainly due to a significant decline in demand in Brazil and in manufacturing activities in Venezuela, as well as by a 5.3% negative currency translation impact.
Net income before restructuring and other exceptional items was $177 million or $0.07 per share. Net income before restructuring and other exceptional items was $177 million, or $0.13 per share, down $8 million against Q1 2013.
Construction Equipment Segment
Net sales for construction equipment were $774 million for the quarter, up 2.7% (+8.1% on a constant currency basis), as industry unit demand increased in every region except LATAM, with light equipment up 6% and heavy up 9% worldwide. The geographic distribution of net sales for the period was 38% NAFTA, 20% EMEA, 31% LATAM and 11% APAC.
Worldwide Construction Equipment share was largely unchanged for the period. Production levels were 5% above retail sales, in line with the recovery in most major markets except for LATAM.
Construction Equipment reported operating profit of $3 million compared to a $26 million loss for Q1 2013, as a result of favorable volume and mix mainly in heavy equipment, as well as positive price realization and positive contribution from containment actions on structural costs.
On April 28, 2014, the Company announced that it intends to enter into a new licensing agreement with Sumitomo (S.H.I.) Construction Machinery Co. Ltd., a wholly owned subsidiary of Sumitomo Heavy Industries Ltd. Under this new technology license and component supply agreement, CNH Industrial will manufacture Sumitomo designed crawler excavators (models ranging from 13 to 35 tonnes) at designated plants within the manufacturing network. Start of production of the new localized models is planned for mid-2016.
This agreement also extends the existing Global Product Supply agreement between CNH Industrial and Sumitomo (S.H.I.) Construction Machinery for the sourcing of excavators manufactured in Sumitomo plants. Since 1992, Sumitomo has been a supplier to the CNH Industrial global distribution network of excavators ranging from 7 to 80 tonnes. This next step will further strengthen the partnership between the two companies.