Today: 19-04-2024

CNH Industrial's Strategic Shift: Guidance Adjustment, Job Cuts, and Share Impact

CNH Industrial Adapts Strategy Amid Market Challenges: Revenue Forecast Lowered, Job Cuts Unveiled

In a strategic response to shifting market dynamics, CNH Industrial, a prominent agricultural and construction machinery manufacturer, announced on Tuesday a downward revision of its 2023 revenue forecast. The adjustment, attributed to a softening demand for farm machinery primarily in South America, triggered a 7.7% drop in the company's shares on the NYSE, with trading intermittently halted in Milan due to heightened volatility.

As part of a comprehensive restructuring plan, CNH Industrial unveiled measures to trim 5% of its salaried workforce costs and reduce total workforce expenses by 10% to 15%. These strategic workforce adjustments aim to realign the company with evolving market conditions, particularly in response to challenges in the South American agricultural machinery sector.

CNH's Chief Executive, Scott Wine, pointed to a downturn in agriculture equipment sales in South America, notably in Brazil, citing concerns among farmers about soft commodity prices and inflated input costs in a historically high inflationary market. Tractor sales in South America witnessed a 16% decline, while combine purchases plummeted by 47% in the three months leading up to September 30.

The company revised its net revenue forecast for industrial activities to a range of 3-6% for the year, down from the previous projection of 8-11%. The free-cash flow estimate was also adjusted to be between $1 and $1.2 billion, reflecting a more cautious outlook.

Despite the challenges, CNH Industrial remains committed to its full-year adjusted earnings per share target of approximately $1.70. The company's third-quarter net sales from industrial activities stood at $5.33 billion, experiencing a 1% year-on-year decline. Quarterly adjusted operating profit from industrial activities totaled $657 million, compared to $670 million in the corresponding period last year.

In response to market conditions, CNH Industrial plans to consolidate its listings, opting for a single listing in New York starting January 2. Additionally, the company has approved a new share buyback program of up to $1 billion, aimed at enhancing liquidity and demonstrating its commitment to navigating challenges with resilience and strategic foresight.

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