CNH profit rises on strong equipment demand, shares down as guidance held By Reuters

By Bianca Flowers

CHICAGO (Reuters) -Farm and construction equipment maker CNH Industrial (NYSE:) reported a rise in operating profit on Friday, boosted by strong demand for its high-horsepower farm equipment and record construction sales.

The Italian-American company maintained its revenue forecast for industrial activities at between 8% and 11%. The company is still projecting a free-cash flow (FCF)estimate of $1.3 billion to $1.5 billion for the year.

While the manufacturer posted strong margin growth across its segments, Milan-listed shares extended earlier losses after results were published and were down more than 4%.

“These are great results, but maybe less great that some of (their) peers and the guidance wasn’t raised,” said Kristen Owen, executive director at Oppenheimer & Co Inc.

The manufacturer reported an adjusted earnings per share of $0.52 compared with $0.43 a year ago.

Robust demand in its agriculture business accounted for $4.9 billion in total sales as the company was able to reach its highest production rate since 2015, a sign that supply chain constraints are further moderating, analysts said. Revenue grew 38% from the year prior in North America, outpacing sales in other regions.

CNH’s profit margins have been propped up by price increases across its machinery segments to help offset inflated input costs and a choppy supply chain. Company executives said pent-up demand for large tractors and combines has led to a ramp-up in production to make up for reduced volume during a nearly nine-month United Auto Workers union strike.

CNH’s second-quarter adjusted earnings before interest and tax (EBIT) of industrial activities increased 25% to $822 million from $654 million a year ago for the period ending in June.

Its quarterly margin on adjusted EBIT was 13.8%, up from 11.7% in the same period last year.