BASILDON, UK - CNH Industrial N.V. (NYSE:CNHI) reported a notable revenue surge in the first quarter, surpassing analyst expectations despite facing a challenging market environment.
The company announced a first-quarter adjusted EPS of $0.33, exceeding the analyst estimate of $0.27. Revenue for the quarter was $4.82 billion, significantly higher than the consensus estimate of $4.45 billion, marking a material revenue beat that sent shares up 1.2%.
The company's net income for the first quarter stood at $402 million with a diluted earnings per share of $0.31, compared to a net income of $486 million and $0.35 EPS in the same quarter last year. CNH Industrial's consolidated revenues saw a decline of approximately 10% YoY, with net sales of Industrial Activities dropping around 14% YoY to $4.13 billion.
Management attributed the revenue beat to favorable price realization in the Agriculture segment and stable performance in Construction, despite lower industry demand and dealer inventory management challenges. The gross profit margin for Industrial Activities decreased to 22.7% from 24.4% in the prior year's quarter, reflecting the impact of lower production volumes in the Agriculture segment, partially offset by price realization and production cost efficiencies.
CNH Industrial's CEO commended the team's efforts in improving production efficiency and disciplined commercial execution in the face of declining market conditions, particularly in South America and Europe. The company's restructuring program is on track, aiming for a 10-15% reduction in total labor and non-labor SG&A expenses, with $78 million in restructuring charges incurred to date.
Looking ahead, CNH Industrial has adjusted its 2024 outlook due to lower agriculture industry sales projections. The Agriculture segment's net sales are expected to decline between 11% and 15% YoY, with an adjusted EBIT margin between 13.5% and 14.5%.
The Construction segment's outlook remains unchanged, with net sales projected to drop between 7% and 11% YoY and an adjusted EBIT margin between 5.0% and 6.0%. The company's free cash flow forecast for Industrial Activities has been revised to between $1.1 and $1.3 billion, with adjusted diluted EPS anticipated to be between $1.45 and $1.55.
Despite the challenges, CNH Industrial remains focused on improving through-cycle margins and continuing its cost reduction programs to mitigate the impact of lower industry demand. The company's shares reflected investor confidence in the wake of the earnings report, with a modest uptick following the announcement.
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