CNH Industrial reported a strong second quarter performance. Consolidated revenues were $8.9 billion, up 60% compared to Q2 2020), net income of $699 million, adjusted diluted EPS of $0.42, and adjusted EBIT of Industrial Activities of $699 million (up $757 million), and $1.0 billion free cashflow of Industrial Activities.
Net sales of Industrial Activities of $8,490 million, up 65%, with solid performance from all segments, as a result of higher volumes driven by strong industry demand and price realization.
Adjusted EBIT of Industrial Activities of $699 million (loss of $58 million in Q2 2020), with all segments up year over year. Agriculture adjusted EBIT margin at 14.7%. Adjusted EBIT of $100 million for Commercial and Specialty Vehicles, $74 million for Powertrain and $24 million for Construction.
Free cashflow of Industrial Activities was positive $1.0 billion due to the strong operating performance. Total Debt of $24.5 billion at June 30, 2021 ($26.1 billion at December 31, 2020). Industrial Activities net cash(1) position at $1.4 billion, an increase of $0.8 billion from March 31, 2021.
Continued recovery across our industrial end markets supported our strong performance in the second quarter. Higher commodity prices stimulated demand for agriculture equipment while supply chain difficulties affected raw material and component costs and availability.
Global supply chain remains unstable and will require continued diligent coordination to work through increasing input costs and logistics pressures which are expected to extend through the second half of the year.
Order book in Agriculture more than doubled year over year for tractors with strong dealer order collection in all regions, particularly in North America, and more than tripled for combines, with strongest growth in North America and South America.
Agriculture Segment
In North America, tractor demand was up 3% for tractors under 140 HP, and up 49% for tractors over 140 HP; combines were up 10%. In Europe, tractor and combine demand were up 31% and 13%, respectively. South America tractor and combine demand were up 38%. In Rest of World tractor and combine demand increased 38% and 12%, respectively.
Net sales were up 56%, mainly due to higher industry demand, better mix in all regions, and favorable price realization.
Adjusted EBIT was $582 million, with Adjusted EBIT margin at 14.7%. The $379 million increase was driven by higher volume, favorable mix and positive price realization, partially offset by higher raw material and freight costs, higher SG&A and R&D spend from the low levels of previous year, as well as higher variable compensation.
2021 Outlook
The Company expects solid demand to continue across regions and segments. In the second half of the year, increased impact of raw material and continued freight and logistics costs will be partially offset by positive price realization.
- The Company is updating the 2021 outlook for its Industrial Activities as follows:
- Net sales up between 24% and 28% year on year including currency translation effects
- SG&A expenses lower/equal to 7.5% of net sales
- Free cash flow positive in excess of $1.0 billion
- R&D expenses and capital expenditures up slightly from previous ~ $2.0 billion.
