CNH sales and profits slump

CNH reported second quarter sales of US$ 547 million for its construction equipment division, down -62% on sales of US$ 1.4 billion 12 months previously. Following a US$ 94 million operating profit for the division in the second quarter of 2008, CNH recorded a US$ 94 million operating loss for the corresponding period this year.

A statement said that CNH shut down many of its production lines for the quarter to reduce inventories and destock dealers. "In effect, we under produced on retail sales units by +52%," said Harold Boyanovsky, president and CEO.

Following an announcement earlier this year about restructuring, CNH has reorganised its construction equipment management structure to reduce costs and increase brand support and product development.

The new organisation, headed by Jim McCullough, the former head of Case Construction Equipment, has already started negotiations about the closure of its manufacturing facility in Imola, Italy. The closure is designed to downsize the company's manufacturing capacity.

For the remainder of 2009, CNH expects the weakness in the global construction equipment market to mirror that of the first half, with 2009 full year sales down -45 to -50% on the full year results for 2008.

Mr Boyanovsky said, "For the third quarter of 2009, we expect global construction equipment sales to be down by up to -55% compared to twelve months ago. The most significant declines are expected in Western Europe and the US."