Farm and construction equipment maker CNH Industrial on Wednesday lowered its 2024 profit forecast for the second time, as slowing demand for its tractors and combines keeps hopes for a recovery in the second half of the year muted.
A sharp drop in crop prices coupled with rising production costs have lowered farm incomes around the world, forcing farmers to rethink purchasing heavy equipment, thus setting a gloomy demand environment for agriculture equipment makers.
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CNH now expects its full-year adjusted profit to be in a range of $1.30 to $1.40 per share, compared with $1.45 to $1.55 per share previously.
The Basildon, UK-based company now expects its agriculture segment net sales to be down between 15 per cent and 20 per cent year-over-year, compared with a fall of 11 per cent to 15 per cent expected previously.
“Our view is that the current down-cycle is likely to extend into 2025 given the current commodities backdrop and the impact on farmer economics globally,” Oppenheimer analyst Kristen Owen said.
U.S. farmer income, a broad measure for farm profitability, is expected to fall about 25 per cent to $116 billion, from $156 billion in 2023.
Still, robust pricing and job cut initiatives undertaken by the company have helped it top revenue estimates in the quarter even as demand remains subdued in an industry-wide downturn.
The company reported a 16 per cent fall in second-quarter revenue to $5.49 billion, but beat analysts’ estimates of $5.32 billion, according to LSEG data.
Shares of the company were up 2.1 per cent in morning trade.
On an adjusted basis, the company earned 38 cents per share, slightly above analysts’ estimates of 37 cents.
“We will continue to manage the business prudently through 2024 while positioning ourselves for 2025,” CEO Gerrit Marx, who took over CNH’s helm on July 1, said in a statement.
