Net sales for construction equipment were $3,346 million in 2014, up 2.7 percent from 2013 (up 5.1 percent on a constant currency basis), due to positive pricing in North American Free Trade Agreement (NAFTA) and Latin America — including Latin and South American regions (LATAM) — along with positive volume and mix in NAFTA and Europe, Middle East and Africa (EMEA). This was partially offset by weakened activity in LATAM and Asia Pacific region (APAC). The geographic distribution of net sales for the year was 44 percent NAFTA, 20 percent EMEA, 27 percent LATAM and 9 percent APAC.
In 2014, worldwide heavy and light construction equipment industry sales were down 9 percent and up 5 percent, respectively, from the prior year. Industry heavy construction equipment sales were up in NAFTA and EMEA but decreased in LATAM and APAC. Industry light construction equipment sales were up in NAFTA and EMEA, flat in APAC and down considerably in LATAM.
Construction equipment’s worldwide market share was in line with the market overall. For heavy construction equipment, market share increased in all regions. For light construction equipment, market share was down
slightly in APAC and EMEA, while up in LATAM.
Construction equipment’s worldwide production was in line with retail sales for 2014. Construction equipment reported operating profit of $79 million for 2014 compared to an operating loss of $97 million for 2013, with an operating margin of 2.4 percent, as a result of favorable pricing in NAFTA and LATAM, positive volume and mix in all regions and lower SG&A and R&D expenses.
For the fourth quarter 2014, net sales totaled $800 million, a decrease of 3.8 percent compared to the same period in 2013 (down 0.5 percent on a constant currency basis), with weakness in LATAM, APAC and EMEA being mostly offset by favorable trading conditions in NAFTA.
Operating profit was $9 million in the fourth quarter, compared to an operating loss of $53 million for Q4 2013, with an operating margin of 1.1 percent, due to lower SG&A and R&D expenses as well as favorable volume and
2015 U.S. GAAP Outlook
The company expects improved profitability in commercial vehicles and construction equipment, coupled with structural cost improvement measures from the company’s efficiency program now extended to agricultural equipment. These actions are expected to buffer but not fully offset the negative impact from the continuation of challenging trading conditions in the row crop sector of the agricultural industry and the impact of the recent significant appreciation of the U.S. dollar against the company’s other trading currencies, allowing the company to hold operating margin unless there are further currency deteriorations from the current rate levels outside the United States.
Therefore, CNH Industrial is setting its 2015 guidance as follows:
- Net sales of industrial activities of approximately $28 billion, with an operating margin of industrial activities between 6.1 percent and 6.4 percent
- Net industrial debt at the end of 2015 between $2.2 billion and $2.4 billion, with the expected cash generation during the year resulting primarily from the inventory reduction in the agricultural equipment segment