Farming boosts CNH earnings

By Michael Burke
Journal Times

Saturday, October 25, 2008 3:16 PM CDT

RACINE — While other companies have struggled in the current economy, Case-New Holland more than doubled its earnings in this year’s third quarter.

CNH, which employs approximately 2,000 people in the Racine area, has been on an earnings growth trend. According to its latest earnings report, CNH’s net earnings rose by 107 percent last quarter, July-September, compared with the same quarter of 2007.

Similarly, earnings per share rose by 108 percent, from 51 cents per share to $1.06.

It was the 11th consecutive quarter of growth in sales, operating profit and net income, CNH President and Chief Executive Officer Harold Boyanovsky said in the earnings release.

“Our agricultural equipment business growth continues in all regions, particularly in the cash grain market segments,” he said.

Helping to feed the agriculture equipment market, CNH said, are cash grain commodity prices which remain at historically high levels — although off their peak of the past few months.

At the same time, the ratios of corn and wheat in stock to the amounts being used remain at historically low levels, the company pointed out. That supports the continued growth of higher-horsepower agricultural tractor and combine markets throughout the world.

Another factor in the strong agriculture equipment sales, CNH said, is that U.S. net farm cash income is expected to be at record levels. Coupled with accelerated depreciation benefits available to buyers of new equipment, orders have been high for fourth-quarter high-horsepower tractors and combines.

That is expected to continue through the first half of 2009.

A combination of a robust agriculture industry and CNH market share gains raised total sales to $4.3 billion, 22 percent above the $3.6 billion of one year

earlier.

The company raised some prices to cope with higher material prices, especially for plate steel and tires.

That increase came despite an 8 percent decline in construction equipment sales, where CNH’s market share did not change.

Boyanovsky said weaker sales in North America and Western Europe were somewhat offset by growth in Latin America and the rest of the world.

Although not as impressive as the quarterly increases, the year through September still shows a 60 percent increase in net income and 26 percent increase in overall sales revenue.

Earnings per share for the year reached $2.99, a 60 percent increase over $1.87 for the same period in 2007.

For the full year, the earnings-per-share forecast is $3.50-$3.90, after tax.

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