MILAN -Agricultural and construction machine maker CNH Industrial beat estimates on Friday with a 14% rise in industrial operating profit in the second quarter and confirmed its full year outlook despite bracing for a global recession.
“Whether we face a global recession in 2023 is up for debate, but we are preparing for this eventuality,” Chief Executive Scott Wine told analysts in a post-earnings call.
The Italian-American company, whose brands include Case IH, Steyr and New Holland, said adjusted earnings before interest and tax (EBIT) from industrial activities reached $654 million in the April-June period, topping a $605 million forecast in an analyst poll compiled by Reuters.
“Pricing, volumes and favourable mix offset significant cost escalation,” Wine said.
He cautioned about “a decidedly less advantageous climate for the next several quarters” but said the group expected to meet its full-year forecast for an increase in its net sales from industrial activities of between 10-14% and for a free cash flow of more than $1 billion.
By 1520 GMT Milan-listed shares in the group were up 5.6%, among the best performers within Italy’s blue chip index.
Wine cited the strong U.S. dollar impacting soft commodity prices, with potential further deterioration in farmer sentiment and income, and a possible decline of European industrial demand due to the war in Ukraine, energy risks and inflation.
However, he added, there were hints the supply chain crunch was easing.
“Raw material, labour, and freight cost escalations are sadly familiar to us, but we are finally starting to see signs of their impact diminishing,” he said.
Wine also said CNH had closed this week the sale of Aerostar, the aerospace and defence solutions business of its U.S. unit Raven.
In a separate statement, Maryland-based TCOM Holdings later on Friday announced the purchase of Aerostar.
Financial details of the transaction were not disclosed.
(Reporting by Giulio Piovaccari; Editing by David Holmes and Keith Weir)
