CNH Industrial reports strong results for Q4 2020. Consolidated revenues of $8.5 billion (up 10%)
CNH Industrial reports strong results for Q4 2020. Consolidated revenues of $8.5 billion (up 10%) and adjusted EBIT of Industrial Activities of $520 million (up 73%), with all segments up year over year. Net income of $187 million and adjusted net income of $432 million. Positive free cash flow of Industrial Activities of $2.4 billion. Industrial Activities net cash of $0.8 billion at December 31, 2020.
Financial results presented under U. S. GAAP «CNH Industrial delivered solid results in Q4, ending 2020 with year-over-year profitability improvements across all industrial segments. Our year-end Industrial Activities net financial position of $0.8 billion was positive for the first time in the company’s history and testifies to the efficacy of our cost containment and cash preservation actions which, together with strong working capital reductions, drove positive free cash flow of $2.4 billion in Q4 and $1.9 billion for the full year. We continued to prioritize the health and safety of our workforce, while supporting our dealers and customers and actively managing our supply chain. While we are guardedly optimistic about the impact of the vaccine roll-out, the current global spike in COVID-19 cases means we must continue to safeguard our employees and our business from the pandemic. During 2020 we invested in new technologies, embraced new ways of working, and positioned the company for strong, profitable growth. Our focus on executing the company separation strategy outlined at our 2019 capital markets day is resolute, and we enter 2021 prepared to unlock our abundant potential, enhance our commitment to our customers, and forge an increasingly profitable future under the leadership of our new CEO, Scott Wine.» Suzanne Heywood, Chair
«It has been an energizing first few weeks with the CNH Industrial team and I find our capabilities and opportunities to be even greater than I anticipated. Suzanne’s adroit stewardship over the last year gave me a chance to get up to speed, instead of addressing lingering issues, and thanks to this CNH Industrial team’s preparation and willingness to share, I have learned a great deal in this short time. I am pleased with the state of the business and the strength of the industry, and enthusiastic about tackling the challenges we face, both in executing vital aspects of our strategy and addressing a dynamic global environment. CNH Industrial is poised to deliver a strong 2021: we are ready to perform, our dealer network is healthy and hungry, and in most segments our customers are displaying solid demand.» Scott Wine, Chief Executive Officer
Net sales of Industrial Activities up 12% due to higher volumes and favorable price realization, mainly in Agriculture and Commercial and Specialty Vehicles. Adjusted EBIT of Industrial Activities increased $219 million, with stronger performance from all segments compared to Q4 2019. Agriculture adjusted EBIT margin above 11%, C&SV at 3.3%. Adjusted net income of $432 million (adjusted diluted earnings per share of $0.30), an increase of $153 million from 2019, after excluding certain items from the $187 million reported net income, primarily the $134 million negative fair value adjustment of the investment in Nikola Corporation, and $125 million ($95 million after-tax)non-cash settlement charge resu ting from the purchase of annuity contracts to settle a portion of the outstanding U.S. pension obligations.
Record positive free cash flow of Industrial Activities of $2.4 billion resulting from the strong operating performance and working capital management. Total Debt of $26.1 billion at December 31, 2020. Industrial Activities net cash(1) position achieved for the first time in CNH Industrial’s history, at $0.8 billion, an improvement of $2.3 billion from September 30, 2020.
Available liquidity at a record level of $15.9 billion at December 31, 2020. In October, CNH Industrial Capital LLC issued $500 million in aggregate principal amount of 1.875% Notes due 2026. In December, CNH Industrial Finance Europe S. A. issued ˆ750 million in aggregate principal amount of 0.000% Notes due 2024. Concurrently, CNH Industrial N. V. prepaid £600 million of commercial paper due 2021 issued in April through the Joint HM Treasury and Bank of England’s Covid Corporate Financing Facilities.
A general improvement was noted in market demand and in customer sentiment, despite increasing COVID-19 restrictions in most geographies. We remain cautious about the future impacts on CNH Industrial’s end-markets and operations of renewed restrictions on social interactions and business operations until widespread vaccination is achieved. Order book in Agriculture up double-digitsyear-over-year for both tractors and combines, with strong growth in North America, South America, and Rest of World. Order book up year-over-year in all Construction sub-segments, with increases in North America compact equipment sub-segment, South America markets, and key sub-regions in Rest of World, particularly India and China. Truck order intake in Europe up 11% year-over-year for both light duty trucks and medium & heavy-duty trucks.
Dividends The Board of CNH Industrial N. V. intends to recommend to the Company’s shareholders an annual cash dividend of ˆ0.11 per common share, totaling approximately ˆ150 million (~$180 million). Subject to the approval of shareholders at the Annual General Meeting (expected on April 15, 2021), the ex-dividend date would be set at April 19, 2021.
2021 Outlook The COVID-19 pandemic continues to impact the global economy. The Company’s 2021 outlook assumes a progressive improvement in economic conditions as populations and markets adjust to the new circumstances. The Company is providing the following 2021 outlook for its Industrial Activities: • Net sales(*) up between 8% and 12% year on year including currency translation effects • Free cash flow positive between $0.4 billion and $0.8 billion • R&D expenses growing to 4.5% of net sales, SG&A expenses lower/equal to 7.5% of net sales, and capital expenditures above 2.5% of net sales.
AGRICULTURE Demand was up in most regions. In North America, tractor demand was up 27% for tractors under 140 HP, and up 17% for tractors over 140 HP; combines were down 1%. In Europe, tractor and combine markets were up 7% and 22%, respectively. South America tractor markets were up 29% and combine markets were up 22%. Significant increase in demand for tractors was also noted in Rest of World while demand for combines was flat Net sales were up 17%, mainly due to favorable price realization in all regions and higher volumes in Europe, South America and Rest of World Adjusted EBIT increased $143 million, with Adjusted EBIT margin at 11%, driven by positive price realization, higher volumes and continued reduction of selling, general and administrative expenses.