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BASILDON, United Kingdom, July 31, 2014 /PRNewswire/ --

FINANCIAL RESULTS UNDER U.S. GAAP(*) (**)

  • Second quarter revenues totaled $8.9 billion ($8.8 billion in Q2 2013). Net sales of Industrial Activities at $8.6 billion ($8.5 billion in Q2 2013).
  • Operating profit of Industrial Activities for the quarter was $678 million, down 1.2% compared to Q2 2013, with operating margin at 7.9% (down 0.1 p.p.).
  • Net income was $358 million in Q2 2014, or $0.26 per share. Net income before restructuring and other exceptional items was $382 million, or $0.28 per share, up $14 million compared to Q2 2013.
  • Net industrial debt was $3.7 billion at June 30, 2014 ($4.0 billion at March 31, 2014). Available liquidity totaled $7.7 billion ($8.1 billion at March 31, 2014), after the issuance of a July 2019 $500 million bond.
  • Full year guidance confirmed.

(*)

Beginning with the filing with the U.S. Securities and Exchange Commission ("SEC") of its annual report on Form 20-F for the fiscal year ended December 31, 2013, prepared in accordance with U.S. GAAP, CNH Industrial reports quarterly and annual financial results both under U.S. GAAP for SEC reporting purposes and under IFRS for European listing purposes and Dutch law requirements. Financial statements under both sets of accounting principles use the U.S. dollar as the reporting currency. In addition, as disclosed in the Form 20-F, CNH Industrial has expanded its reportable segments from three (Agricultural and Construction Equipment inclusive of its financial services activities, Trucks and Commercial Vehicles inclusive of its financial services activities, and Powertrain) to five (Agricultural Equipment, Construction Equipment, Commercial Vehicles, Powertrain and Financial Services). The following tables and comments on the financial results of the Company and by segments are prepared in accordance with U.S. GAAP. Financial results under IFRS are shown in a subsequent section of this press release. Prior period results under IFRS, prepared in euro, have been consistently recast into U.S. dollars.  A summary outlining the Company's transition to U.S. GAAP and the U.S. dollar as the reporting currency is available on the Company's website, www.cnhindustrial.com.

(**)

Refer to the Non-GAAP Financial Information section of this press release for information regarding Non-GAAP financial measures.

 


CNH INDUSTRIAL

Summary Income Statement ($ million)





1st Half




2nd Quarter



2014

2013

Change


2014

2013

Change



16,451

16,380

0.4%

Revenues

8,911

8,829

0.9%



459

499

-40

Net income

358

348

10



559

553

6

Net income before restructuring and other exceptional items

382

368

14



454

394

60

Net income attributable to CNH Industrial N.V.

354

283

71



0.33

0.32

0.01

Basic EPS ($)

0.26

0.23

0.03



0.41

0.37

0.04

Basic EPS before restructuring and other exceptional items ($)

0.28

0.25

0.03



0.33

0.32

0.01

Diluted EPS ($)

0.26

0.23

0.03












CNH INDUSTRIAL
Income Statement Data of Industrial Activities(1) ($ million)





1st Half




2nd Quarter



2014

2013

Change


2014

2013

Change



15,777

15,793

-0.1%

Net sales of Industrial Activities

8,564

8,536

0.3%



1,090

1,107

-17

Operating profit of Industrial Activities (2)

678

686

-8



6.9

7.0

-0.1 p.p.

Operating margin of Industrial Activities (%)

7.9

8.0

-0.1 p.p



(1) Industrial Activities represent the activities carried out by the four industrial segments Agricultural Equipment, Construction Equipment, Commercial Vehicles, and Powertrain, as well as corporate functions.

(2) Operating profit of Industrial Activities is a non-GAAP measure and is defined as net sales less cost of goods sold, selling, general and administrative expenses, and research and development expenses.


 

CNH Industrial N.V. (NYSE: CNHI / MI: CNHI) today announced consolidated revenues of $8,911 million for the second quarter of 2014, up 0.9% compared to Q2 2013. Net sales of Industrial Activities were $8,564 million in Q2 2014, marginally up on the prior year. Net sales increased in Powertrain, offsetting declines in Agricultural Equipment (primarily in LATAM and in NAFTA) and slight decreases in Construction Equipment and Commercial Vehicles.

CNH INDUSTRIAL

Revenues by Segment ($ million)


1st Half


2nd Quarter



2014

2013

% change


2014

2013

% change



8,142

8,483

-4.0

Agricultural Equipment

4,436

4,539

-2.3



1,705

1,693

0.7

Construction Equipment

931

939

-0.9



5,012

5,039

-0.5

Commercial Vehicles

2,704

2,718

-0.5



2,451

2,074

18.2

Powertrain

1,250

1,100

13.6



(1,533)

(1,496)

-

Eliminations and other

(757)

(760)

-



15,777

15,793

-0.1

Total Industrial Activities

8,564

8,536

0.3



908

831

9.3

Financial Services

468

414

13.0



(234)

(244)

-

Eliminations and other

(121)

(121)

-



16,451

16,380

0.4

Total

8,911

8,829

0.9











 

Operating profit of Industrial Activities was $678 million in Q2 2014, a 1.2% decrease compared to Q2 2013 with an operating margin for the second quarter of 7.9%, in line with Q2 2013. Operating profit improvements in Construction Equipment, Powertrain and Commercial Vehicles in EMEA were offset by the negative effects of poor trading conditions in Commercial Vehicles in LATAM, due to a significant decline in market demand, and by negative volume and mix for Agricultural Equipment, primarily in NAFTA and LATAM.

CNH INDUSTRIAL

Operating profit/(loss) by Segment (1) ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



1,096

1,114

-18

Agricultural Equipment

632

646

-14



31

(13)

44

Construction Equipment

28

13

15



(91)

(39)

-52

Commercial Vehicles

(21)

(11)

-10



98

68

30

Powertrain

64

54

10



(44)

(23)

-21

Eliminations and other

(25)

(16)

-9



1,090

1,107

-17

Total Industrial Activities

678

686

-8



286

282

4

Financial Services

152

141

11



(174)

(157)

-17

Eliminations and other

(94)

(77)

-17



1,202

1,232

-30

Total

736

750

-14



(1) Operating profit of Industrial Activities (a non-GAAP measure) is defined as net sales less cost of goods sold, selling, general and administrative expenses, and research and development expenses. Operating profit of Financial Services (a non-GAAP measure) is defined as revenues less selling, general and administrative expenses, interest expense and certain other operating expenses.











 

CNH INDUSTRIAL

Reconciliation of Operating Profit to Net Income ($ million)


1st Half



2nd Quarter



2014

2013



2014

2013



1,202

1,232

Total Operating Profit


736

750



42

29

Restructuring expenses


30

20



299

254

Interest expenses of Industrial Activities, net of interest income and eliminations


158

142



(157)

(157)

Other, net


(63)

(60)



704

792

Income before income taxes and equity in income of unconsolidated subsidiaries and affiliates


485

528



301

359

Income taxes


158

221



56

66

Equity in income of unconsolidated subsidiaries and affiliates


31

41



459

499

Net income


358

348


















 

Restructuring expenses totaled $30 million, $10 million higher than Q2 2013, and relate in part to Construction Equipment, as a result of the announced closure of the Company's Calhoun, Georgia, USA facility, and in part to Commercial Vehicles.

Interest expense, net totaled $158 million for the quarter, $16 million higher than Q2 2013, primarily due to an increase in average net industrial debt, partially offset by more favorable interest rates.

Income taxes totaled $158 million, representing an effective tax rate of 32.6% for the quarter. The decrease from the 41.9% Q2 2013 effective tax rate is mainly due to the favorable resolution of tax audits for which specific provisions had been made and lower losses in jurisdictions where such losses cannot be book benefitted. The Company's effective tax rate for the year is still expected to be in the range of 40% to 44% due to the inability to recognize the tax benefit of losses in certain jurisdictions.

Equity in income of unconsolidated subsidiaries and affiliates totaled $31 million for the quarter ($41 million for Q2 2013). The decrease was mainly due to lower results from APAC joint ventures, primarily as a result of lower industry volumes in China.

Net income of Financial Services was $105 million for the quarter compared to $96 million for Q2 2013, mainly as a result of higher levels of activity and lower income taxes.

Consolidated net income was $358 million for the quarter ($348 million for Q2 2013), or $0.26 per share ($0.23 for Q2 2013). Net income before restructuring and other exceptional items (a non-GAAP measure) was $382 million for the quarter ($368 million in Q2 2013).

Net industrial debt of $3.7 billion at June 30, 2014 was $0.3 billion lower than at March 31, 2014, as cash flow generated from operating activities of $0.8 billion, including a positive change in working capital, was partially offset by a $0.4 billion dividend payment and $0.2 billion capital expenditure activity.

Available liquidity at June 30, 2014 was $7.7 billion, inclusive of $2.3 billion in undrawn committed facilities, compared to $8.1 billion at March 31, 2014. The decrease is mainly attributable to the dividend payment mentioned above, as well as cash utilized to support portfolio growth for the financial services activities, partially offset by the proceeds from the $500 million bond issued at the end of June by CNH Industrial Capital LLC, due July 2019, with a fixed rate coupon of 3.375%.

Efficiency Program

The Company has decided to launch a comprehensive efficiency program designed to enhance efficiency and competitiveness of its Industrial Activities.

The program is expected to result in a total cumulative charge of approximately $280 million over the next three years, with a non-cash impact of approximately 20%. The majority of the restructuring charges are expected to impact the statement of operations in 2014 and 2015. Benefits from this program are expected as early as the second half of 2014, with annualized savings of approximately $160 million by the end of 2016.

Restructuring actions in the Agricultural Equipment segment are mainly related to the closure of a joint venture as the business model is no longer viable in the current environment.

Actions identified by Construction Equipment are related to the re-tooling of its industrial footprint in connection with the recently announced enlargement of the licensing agreements with Sumitomo (S.H.I.) Construction Machinery Co., Ltd, as well as the re-positioning of Case and New Holland brand offerings and the consequent alignment of their dealer networks. The recently announced closure of the assembly plant in Calhoun, Georgia, represents one of those actions.

Commercial Vehicles actions will focus on SG&A expenses and business support costs as a result of the transition to CNH Industrial's regional structure, as well as on the completion of manufacturing product specialization programs.

2014 U.S. GAAP Guidance

CNH Industrial is confirming its 2014 U.S. GAAP guidance, consistent with the 5-year plan financial projections presented at the Investor Day on May 8th, as follows:

  • Net sales of Industrial Activities at approximately $32 billion;
  • Operating profit of Industrial Activities between $2.1 billion and $2.2 billion, with margin between 6.5% and 6.9%;
  • Net industrial debt between $2.2 billion and $2.1 billion at the end of 2014;
  • Consolidated net income before restructuring between $0.9 billion and $1.0 billion, with earnings per share before restructuring between $0.69 and $0.74.

CNH INDUSTRIAL

Key Balance Sheet data   ($ million)



06.30.2014

03.31.2014

12.31.2013



Total assets

55,542

54,698

53,843



Total equity

5,144

5,081

4,955



Equity attributable to CNH Industrial N.V.

5,088

5,028

4,901







CNH INDUSTRIAL

Net debt    ($ million)



06.30.2014

03.31.2014

12.31.2013



Total debt (1)

(31,339)

(31,296)

(29,866)



- Asset-backed financing

(14,312)

(14,576)

(14,712)



- Other debt

(17,027)

(16,720)

(15,154)



Derivative hedging debt

41

44

44



Cash and cash equivalents

4,615

5,028

5,567



Restricted cash

751

841

922



Net debt 

(25,932)

(25,383)

(23,333)



Industrial Activities

(3,692)

(4,024)

(2,214)



Financial Services

(22,240)

(21,359)

(21,119)









Cash, cash equivalents and restricted cash

5,366

5,869

6,489



Undrawn committed facilities

2,285

2,261

2,224



Available liquidity

7,651

8,130

8,713



(1)   Inclusive of adjustments to fair value hedges.

 

CNH INDUSTRIAL

Change in Net Industrial Debt    ($ million)



1st Half



2nd Quarter



2014

2013


2014

2013



(2,214)

(1,961)

Net industrial (debt)/cash at beginning of period

(4,024)

(3,197)



459

499

Net income

358

348



358

346

Amortization and depreciation (*)

183

174



87

239

Changes in provisions and similar, and items related to assets sold under buy-back commitments, and assets under operating lease

24

228



(1,744)

(1,293)

Change in working capital

267

216



(342)

(400)

Investments in property, plant and equipment, and intangible assets (*)

(200)

(216)



24

(80)

Other changes

4

(108)



(1,158)

(689)

Net industrial cash flow

636

642



(373)

(368)

Capital increases and dividends

(374)

(368)



53

(31)

Currency translation differences

70

(126)



(1,478)

(1,088)

Change in Net industrial debt

332

148



(3,692)

(3,049)

Net industrial (debt)/cash at end of period

(3,692)

(3,049)



(*) Excluding assets sold under buy-back commitments and assets under operating lease.

 

Agricultural Equipment

AGRICULTURAL EQUIPMENT

Net sales & Operating profit/(loss) ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



8,142

8,483

-4.0%

Net sales

4,436

4,539

-2.3%



1,096

1,114

-18

Operating profit

632

646

-14



13.5

13.1

0.4 p.p.

Operating margin (%)

14.2

14.2

0.0 p.p.



Net sales for Agricultural Equipment were $4,436 million for the quarter, down 2.3% from Q2 2013, driven by lower volumes, primarily in LATAM and NAFTA, as well as less favorable product mix, partially offset by net pricing. The geographic distribution of net sales for the period was 43% NAFTA, 37% EMEA, 10% LATAM and 10% APAC.

Worldwide agricultural equipment industry unit sales were down during the second quarter of 2014, with global demand for tractors and combines down approximately 12%. In NAFTA, tractor demand was up 1%, with the under 40 hp segment up 4% and the over 40 hp segment down 2%, while combines were down 20%. In EMEA, tractor and combine markets were down 7% and 9%, respectively. LATAM tractor and combine markets decreased 12% and 30%, respectively. In APAC, demand decreased 16% for tractors and was flat for combines.

Market share performance was mainly flat for tractors, except for LATAM where there was a slight decrease. Combines market share decreased in all markets except for NAFTA, where it was flat.

Production of Agricultural Equipment was 6% above retail sales for the quarter, to support normal seasonality and in anticipation of the facilities' summer shutdown schedules. The Company expects to under-produce retail demand in the second half of the year.

Agricultural Equipment operating profit was $632 million for the quarter ($646 million in Q2 2013). Operating margin remained at 14.2%, with negative volume and mix (primarily large horsepower tractors and combines in NAFTA) being offset by pricing and cost control actions to recover Tier 4B related content costs, inflation and adverse foreign exchange movements.

 

Construction Equipment

CONSTRUCTION EQUIPMENT

Net sales & Operating profit/(loss) ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



1,705

1,693

0.7%

Net sales

931

939

-0.9%



31

(13)

44

Operating profit/(loss)

28

13

15



1.8

(0.8)

2.6 p.p.

Operating margin (%)

3.0

1.4

1.6 p.p.



Net sales for Construction Equipment were $931 million for the quarter, down 0.9%, as higher demand in NAFTA was offset by a decrease in market volumes in LATAM and APAC. The geographic distribution of net sales for the period was 43% NAFTA, 19% EMEA, 29% LATAM and 9% APAC.

Industry volumes were down 10% and 2% in heavy and light, respectively, in the second quarter of 2014 compared to the prior year. Decreased industry volumes in LATAM and APAC were partially offset by growth in NAFTA and EMEA.

Worldwide Construction Equipment market share performance was flat overall.

Production levels were 12% above retail sales, as the industry in NAFTA and EMEA began to recover.

Construction Equipment reported operating profit of $28 million compared to $13 million for Q2 2013, with an operating margin of 3.0% (1.4% for Q2 2013), as a result of continued price resilience in NAFTA and LATAM and cost containment actions, partially offset by negative volume and mix.

In June the Company announced that it will close its assembly plant in Calhoun, Georgia, USA in the third quarter of 2015. The closure is due to the Company's announced transition to a single excavator partner, and is part of the business footprint optimization program which is a key pillar to achieving the 5-year operating profit target.

 

Commercial Vehicles

COMMERCIAL VEHICLES

Net sales & Operating profit/(loss) ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



5,012

5,039

-0.5%

Net sales

2,704

2,718

-0.5%



(91)

(39)

-52

Operating profit/(loss)

(21)

(11)

-10



(1.8)

(0.8)

-1.0 p.p.

Operating margin (%)

(0.8)

(0.4)

-0.4 p.p.



Commercial Vehicles posted second quarter net sales of $2,704 million, flat with prior year. Increased deliveries in EMEA, were partially offset by a significant decrease in LATAM and a decrease in deliveries in the bus business due to the transition to Euro VI applications. APAC net sales benefited from better mix due to increased heavy vehicle sales. LATAM net sales significantly decreased due to sharp market declines across the region, as a result of overall weak economic conditions and a deterioration in the terms of subsidized financing. Production has been reduced to allow for dealer inventories to be aligned to market demand. The geographic distribution of net sales for the period was 75% EMEA, 16% LATAM and 9% APAC.

Commercial Vehicles delivered a total of 33,057 vehicles (including buses and specialty vehicles), representing a 3.6% decrease over Q2 2013. Volumes were higher in the light segment (+3.4%), while volumes declined in the heavy (-3.3%) and medium (-25.2%) segments. Commercial Vehicles deliveries increased 10% in EMEA and 2% in APAC, while LATAM was down 44% (Brazil down approximately 34%, Argentina down approximately 57% and Venezuela suspending operations as announced in April 2014.)

The European truck market (GVW ≥3.5 tons) was up 3.1% over Q2 2013 to approximately 175,500 units. Light vehicles (GVW 3.5-6 tons) increased 7.7%, while the medium vehicles market (GVW 6.1-15.9 tons) and the heavy vehicles market (GVW >16 tons) decreased 14.8% and 1.1%, respectively.

The Company's second quarter market share in the European truck market (GVW ≥3.5 tons) was estimated at 11.0%, a decline of 0.3 p.p., mainly due to negative market mix and the transition to the new Daily, launched in June. In the light segment the share declined by 0.8 p.p. to 11.0%. In the medium vehicles segment the Company's market share increased by 3.0 p.p. to 27.9%. Heavy vehicle market share was up 0.5 p.p. to 7.3%.

In LATAM, new truck registrations (GVW ≥3.5 tons), at 45,800 units, were down 22.8% compared with Q2 2013. The largest decrease was registered in Venezuela (-81.7%), while Argentina was down 35.1% and Brazil decreased 12.8%.

The Company's share of the LATAM market (GVW ≥3.5 tons) was down 1.3 p.p. from Q2 2013 to 9.3%.

In APAC registrations were down 6.2% and market share decreased 0.1 p.p. compared with Q2 2013.

In EMEA, dealer inventories of new vehicles remained stable compared to year-end 2013, representing coverage of approximately three months of expected retail activity.

Commercial Vehicles closed the second quarter with an operating loss of $21 million compared to a loss of $11 million for Q2 2013. Positive volume, mix and pricing in both light and heavy vehicles in EMEA, favorable product mix in APAC, and lower selling, general and administrative expenses as a result of continued cost containment actions were more than offset by losses in LATAM, including negative fixed-cost absorption in manufacturing plants, and by Euro VI transition costs in the bus business and costs associated with the ramp-up of production related to new products.

Powertrain

POWERTRAIN

Net sales & Operating profit/(loss) ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



2,451

2,074

18.2%

Net sales

1,250

1,100

13.6%



98

68

30

Operating profit

64

54

10



4.0

3.3

0.7 p.p.

Operating margin (%)

5.1

4.9

0.2 p.p.



Powertrain reported second quarter net sales of $1,250 million, an increase of 13.6% over Q2 2013 primarily attributable to higher volumes. Sales to external customers accounted for 41% of total net sales (33% in the same period in 2013).

During the quarter, Powertrain sold a total of 160,418 engines, an increase of 18% year-over-year. By major customer, 25% of engines were supplied to Agricultural Equipment, 24% to Commercial Vehicles, 5% to Construction Equipment and the remaining 46% to external customers (units sold to third parties were up 35% over Q2 2013). Additionally, Powertrain delivered 18,298 transmissions and 44,138 axles, an increase of 3% and 6%, respectively, compared to the same period in 2013.

Powertrain closed the second quarter with an operating profit of $64 million, up $10 million from the same period in 2013, with an operating margin of 5.1% (4.9% for Q2 2013). The improvement was mainly due to the increase in volumes and related industrial efficiencies.

 

Financial Services

FINANCIAL SERVICES

Revenues & Net income ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



908

831

9.3%

Revenues

468

414

13.0%



191

155

36

Net income

105

96

9



Financial Services reported second quarter revenues of $468 million, an increase of 13.0% compared to Q2 2013, primarily driven by the increase in the average value of the portfolio. 

Financial Services reported net income of $105 million, up $9 million over the same period in 2013, mainly due to higher average portfolio value and lower income taxes.

Retail loan originations in the quarter were $2.7 billion, flat compared to Q2 2013. The managed portfolio (including joint ventures) of $29.1 billion (of which retail was 65% and wholesale 35%) was up $1.4 billion compared to March 31, 2014 (of which retail was up $0.4 billion and wholesale was up $1.0 billion).


FINANCIAL RESULTS UNDER IFRS (*)

(*)

Refer to the Non-GAAP Financial Information section of this press release for information regarding Non-GAAP financial measures. Prior period results prepared in euro have been consistently recast into U.S. dollar.



CNH INDUSTRIAL

Summary Income Statement under IFRS ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



16,652

16,580

0.4%

Consolidated net revenues

9,008

8,922

1.0%



1,311

1,366

-55

Consolidated trading profit

801

828

-27



7.9

8.2

-0.3 p.p

Trading margin (%)

8.9

9.3

-0.4 p.p



898

1,057

-159

Profit before taxes

607

693

-86



549

655

-106

Profit

403

429

-26



544

538

6

Profit attributable to CNH Industrial N.V.

399

356

43



0.40

0.44

-0.04

Basic EPS ($)

0.29

0.29

0.00



0.40

0.44

-0.04

Diluted EPS ($)

0.29

0.29

0.00



On an IFRS basis, CNH Industrial posted net revenues of $9,008 million for the second quarter of 2014, an increase of 1.0% from the same quarter in 2013.

Consolidated trading profit was $801 million for the second quarter, down $27 million or -3.3% from Q2 2013. Trading margin for the second quarter decreased 0.4 p.p. to 8.9%. Agricultural Equipment trading profit was $611 million ($627 million in Q2 2013), with a trading margin of 13.8%, in line with Q2 2013. Construction Equipment reported a trading profit of $34 million ($12 million in Q2 2013) with a trading margin of 3.7% (1.3% for Q2 2013). Commercial Vehicles closed the second quarter with a trading loss of $39 million (trading profit of $8 million for Q2 2013). Powertrain reported a trading profit of $65 million, compared to $53 million for Q2 2013, with a trading margin of 5.2% (4.8% for Q2 2013). Financial Services trading profit was $146 million ($144 million in the same period in 2013).

Profit before taxes totaled $607 million ($693 million for Q2 2013), down $86 million. The decline was mainly due to the $27 million reduction in trading profit, the $20 million increase in net unusual expenses associated with higher restructuring costs and higher net financial expenses. The increase of $26 million in net financial expenses is attributable to higher average net industrial debt and higher foreign exchange losses, partially offset by more favorable interest rates. Results from investments declined by $13 million to $30 million, due to reduced results from APAC joint ventures.

Income taxes for the second quarter totaled $204 million ($264 million for Q2 2013), representing an effective tax rate of 33.6% for the quarter. The decrease from the 38.1% Q2 2013 effective tax rate is mainly due to the favorable resolution of tax audits for which had been provided for in prior periods. The Company's 2014 forecast effective tax rate is still expected to be in the range of 36% to 40%.

Consolidated net profit was $403 million, or $0.29 per share, compared with $429 million, or $0.29 per share for Q2 2013.

Net industrial debt of $3.8 billion at June 30, 2014 was $0.2 billion lower than at March 31, 2014.


CNH INDUSTRIAL

Revenues by Segment under IFRS ($ million)


1st Half


2nd Quarter



2014

2013

% change


2014

2013

% change



8,142

8,483

-4.0

Agricultural Equipment

4,436

4,539

-2.3



1,705

1,693

0.7

Construction Equipment

931

939

-0.9



5,110

5,123

-0.3

Commercial Vehicles

2,756

2,760

-0.1



2,457

2,080

18.1

Powertrain

1,252

1,103

13.5



(1,533)

(1,496)

-

Eliminations and other

(757)

(760)

-



15,881

15,883

0.0

Total Industrial Activities

8,618

8,581

0.4



1,037

965

7.5

Financial Services

528

474

11.4



(266)

(268)

-

Eliminations and other

(138)

(133)

-



16,652

16,580

0.4

Total

9,008

8,922

1.0




CNH INDUSTRIAL

Trading profit/(loss) by Segment under IFRS ($ million)


1st Half


2nd Quarter



2014

2013

Change


2014

2013

Change



1,053

1,073

-20

Agricultural Equipment

611

627

-16



35

(16)

51

Construction Equipment

34

12

22



(113)

(15)

-98

Commercial Vehicles

(39)

8

-47



95

68

27

Powertrain

65

53

12



(35)

(23)

-12

Eliminations and other

(16)

(16)

0



1,035

1,087

-52

Total Industrial Activities

655

684

-29



276

279

-3

Financial Services

146

144

2



-

-

-

Eliminations and other

-

-

-



1,311

1,366

-55

Total

801

828

-27



 

CNH INDUSTRIAL

Key Balance Sheet data under IFRS   ($ million)



06.30.2014

03.31.2014

12.31.2013



Total assets

58,139

57,293

56,462



Total equity

7,905

7,827

7,662



Equity attributable to CNH Industrial N.V.

7,846

7,758

7,591



Net debt

(26,052)

(25,363)

(23,290)



Of which Net industrial debt

(3,804)

(3,977)

(2,195)



 

The following table reconciles Net income under U.S. GAAP to Profit under IFRS:

CNH Industrial

Net income reconciliation   ($ million)


1st Half


2nd Quarter



2014

2013


2014

2013



459

499

Net income under U.S. GAAP

358

348





Adjustments to conform with IFRS:





142

165

Development costs, net of amortization

82

102



4

4

Goodwill and other intangible assets

2

2



8

8

Defined benefit plans

4

4



(23)

10

Restructuring provisions

(5)

11



7

12

Other adjustments

8

5



(46)

(68)

Tax impact on adjustments

(32)

(42)



(2)

25

Deferred tax assets and tax contingencies recognition

(14)

(1)



90

156

Total adjustments

45

81



549

655

Profit under IFRS

403

429






 

2014 IFRS Guidance

CNH Industrial is confirming its 2014 IFRS guidance, consistent with the 5-year plan financial projections presented at the Investor Day on May 8th, as follows:

  • Consolidated revenues at approximately $34 billion;
  • Consolidated trading profit between $2.6 billion and $2.7 billion;
  • Net industrial debt between $2.2 billion and $2.1 billion at the end of 2014;
  • Consolidated net income before restructuring between $1.1 billion and $1.2 billion.


Sergio Marchionne





Richard Tobin

Chairman





Chief Executive Officer

Appendix - New product announcements during the quarter

Agricultural Equipment

Case IH

  • The Case IH Axial-Flow 9230 received a Silver Award at the International Machinery Manufacturer's Awards (IMMA) at the UK's Cereals Event held during June in Lincolnshire. The judges commended the Axial Flow's innovative pivoting auger spout and folding unloading auger with the 9230 being the only combine to be recognized in the competition.
  • In the UK, Case IH expanded and upgraded its Farmall C tractor range to include six new four-cylinder models from 58-107 hp. All feature new 3.4-liter, four-cylinder, common rail diesel engines which are both turbocharged and intercooled.
  • Case IH celebrated the production of its 150,000th Magnum tractor in Racine, Wisconsin, USA in April.
  • Building on a field-proven Case IH tillage legacy, in North America the brand launched the new True-Tandem 345 seed bed disk harrow which delivers key advances to improve field finish, durability and machine productivity. Unlike competitive offset disk harrows, the Case IH True-Tandem's symmetrical design offers a long life of straight and easy pulling in the roughest field conditions.
  • In Australia, Case IH introduced a new generation of hay balers with the release of the RB5 Series round baler. The RB5 Series features superior bale shape and density, offering advanced features with modern best-in-class styling. The RB455 and RB465 produce bales of up to 1.5 and 1.8 meters in diameter respectively, with both models featuring a new dual cylinder hydraulic density system.

New Holland Agriculture

  • In NAFTA, New Holland Agriculture partnered with the Agricultural Technology Innovation Partnership Foundation (ATIP) in the public-private "Resilient Economic Agricultural Practices" partnership to enhance research on sustainable soil health for multiple land uses in agriculture.
  • In June, at the Canadian Farm Progress trade show, New Holland launched the new CR combine harvester series, the culmination of 40 years of Twin Rotor® technology, featuring up to 15% more productivity, grain crackage as low as 0.2% and the ultimate comfort of the new Harvest Suite Ultra cab. The brand also introduced the new Tier 4B Guardian front-boom sprayer models, including the SP400F, the highest-capacity sprayer in the industry. In addition to a revolutionary front-boom design, this model features industry-leading horsepower, combined with the available 1,600 US/gallon tank and 120-foot boom options to enhance productivity.
  • Launched for the first time in Europe at the Cereals trade show in the UK, New Holland's popular T4 tractor range has been enhanced with the additional 24x24 Dual Command transmission with Creeper option, the SuperSteer front axle technology and improved operator comfort. Also introduced at the show was the upgraded T4 PowerStar series tractor, the first in Europe to feature particulate matter catalyst technology for Tier 4B compliance and equipped with the common rail system for up to 13% fuel savings and enhanced operating productivity and efficiency.
  • New Holland launched a new TT4 economy utility tractor range in the Australian market. The TT4 will replace the original Series TT which revolutionized the economy tractor market when it was released in the Australian market in 2005. The new range of tractors comprises three models: the TT4.55, TT4.65 and TT4.75, producing engine power from 55 to 75 hp.
  • Represented by its best-selling BC5000 small square baler, New Holland Agriculture was recently voted as "National Agricultural Machinery Consumer-Satisfying Brand" in 2014 in China. The campaign was organized by Farm Machinery magazine.

***

  • CNH Industrial and The Climate Corporation, a division of Monsanto Company, announced a licensing agreement for precision planting technology. This non-exclusive agreement provides CNH Industrial and The Climate Corporation the opportunity for factory integration into CNH Industrial agricultural planters of select precision planting technology specifically designed to optimize planting performance, including the Case IH Early Riser® Planters.
  • The joint venture between CNH Industrial and Koç Holding inaugurated its second manufacturing plant in Turkey, which will produce Case IH and New Holland Agriculture tractors for the local and export markets. The inauguration coincided with the 60th anniversary of TurkTraktor, the country's leading tractor manufacturer.

Construction Equipment

Case Construction

  • With one of the largest stands at this June Hillhead exhibition in the UK, Case Construction exhibited an extensive selection of machines that demonstrate innovation and engineering excellence. With 90% of all machines equipped with the latest Tier 4A engines and SCR advanced fuel-saving system technology, the brand continues to lead the way with fuel-efficient and powerful equipment.
  • Case Construction expanded its industry-leading backhoe loader range in Africa and the Middle East with the new Case 570T. This entry-level backhoe loader stands out from the competition with features such as the fuel-efficient FPT S8000 engine, the S-tyled boom, strong and robust build for enhanced reliability and its heavy-duty front axle. Additionally, the 570T has the largest cab in the segment and a design optimized for serviceability.
  • In Brazil, Case Construction participated at the May Agrishow fair in Ribeirao Preto, displaying several machines that have agriculture related capabilities (such as the 621D and 721E wheel loaders) which can be used in sugar cane production applications.

New Holland Construction

  • In Europe, New Holland Construction developed a B100C backhoe loader for use in the marble quarry sector. The B100C backhoe loader is equipped with a support arm and chain cutter, mounted in place of the traditional backhoe, offering a new method for cutting blocks of marble. The B100C was fitted with a chain cutter developed by marble cutting specialist Benetti Macchine S.p.A., working in close collaboration with the New Holland Construction engineering division in Lecce.
  • New Holland Construction updated its skid steer loader range in Africa and the Middle East in April, to offer more engine and hydraulic power thanks to the 2.2 liter engine displacement, best-in-class breakout forces and increased productivity, while maintaining outstanding cab space and all-round visibility, with the new L213 and L215 models.
  • New Holland Construction participated in Agrishow 2014 in Brazil during May, using the show to introduce a new product, the 12D wheel loader, and displaying the evolution of its main product lines dedicated to the sector, such as the D140B dozer.
  • In Brazil, New Holland Construction was chosen to receive a civil engineering award sponsored by IMEC (Instituto Mineiro de Engenharia Civil) in the category of "Dozers/Excavators" in April.

***

In April CNH Industrial announced a new strategic partnership with Leica Geosystems, a leading global provider of design, measurement and visualization technologies, specializing in machine control solutions for construction equipment. Under this agreement, Leica Geosystems will initially provide CNH Industrial's Case and New Holland Construction brands with machine control solutions for excavators, dozers and graders for both factory fit and aftermarket applications.

Commercial Vehicles

Trucks

  • Major events during the second quarter included the presentation of Iveco's third generation Daily light vehicle range to dealers and the international press. The fully redesigned Daily continues to offer reliability, efficiency and versatility. It offers reduced fuel consumption compared with its predecessor, together with a significant improvement in operating costs, and best-in-class performance with a wide range of engines, transmissions and axle ratios. The new Daily has been available through dealerships across Europe since early June. At the beginning of June, Iveco previewed in Italy the new Daily 2014 for dealers, key customers and press from APAC markets together with a test drive program. The vehicle will be available in Turkey from the fourth quarter of 2014, and will be gradually introduced in other APAC markets during 2015.
  • The second quarter was highly successful for the Iveco Euro VI Stralis Hi-Way truck, which is equipped with the FPT patented HI-eSCR (High Efficiency SCR) after-treatment system. This solution, unique in the industry, requires neither EGR nor an actively regenerating DPF, and has contributed to lowering the range's Total Cost of Ownership, and, together with aerodynamic optimization, has reduced fuel consumption by a further 2.33% when compared to previous Euro V models, as certified by Germany's respected TÜV technical certification center.
  • In APAC, in mid-April Iveco officially introduced the third generation Iveco Trakker at the NAMI test area near Moscow, Russia to press, dealers and key clients.
  • In April, Iveco officially entered the imported heavy duty on-road segment in China, with delivery of the first batch of five Stralis Hi-Way trucks, specially adapted for LNG transport.
  • In June, Iveco launched the "Check Stop" campaign in Italy in association with the Italian Ministry of Transport. The campaign consists of specially-equipped Iveco hospitality vehicles at several locations in Italy, where drivers will be offered a complimentary check-up on their state of alertness, fatigue, etc. as well as a safety check of their vehicle.

Bus

  • In EMEA, CNH Industrial's bus brands, Heuliez Bus and Iveco Bus, won a significant portion of a major tender from the Paris transit authority, RATP, which awarded the brands three of the four lots constituting a major multi-year tender for some 1,000 standard 12-meter hybrid and natural gas city buses. This is the first time that Heuliez Bus won a major tender from RATP with its GX 337 HYB model. For Iveco Bus, it represented consolidation of its position as the largest bus supplier to RATP due to its leadership in hybrid and natural gas technologies.
  • In June, both Iveco Bus and Heuliez Bus attended the European Mobility Exhibition in Paris. Heuliez Bus displayed the new Euro VI GX 337 and the GX 437 hybrid. Iveco Bus presented the all-new Urbanway BHNS (High Service Level Bus) and the Urbanway 18m Full Hybrid.
  • In APAC in April, Iveco Bus made its first public appearance in Russia at the 7th edition of World of Buses, the country's largest annual trade show in the collective passenger transport sector. The brand presented for the first time in Russia the Citelis CNG 12m City Bus, which provides a "clean" solution to urban transport, and also displayed the best-selling Crossway 12m Intercity Bus, and the new FeniksBus Minibus Tourist Version, based on the Iveco Daily chassis.

Specialty Vehicles

  • Magirus, CNH Industrial's firefighting vehicle brand, celebrated its 150th anniversary in June. In May, the German Association of Communications Agencies recognized Magirus for its "Serving heroes. Since 1864" campaign.
  • In LATAM, in June the Company recorded an important milestone with production of the 100th Guarani for the Brazilian Army, just one year after Iveco Defence Vehicle's factory in Sete Lagoas started operations.

Powertrain

  • At Samoter 2014 in May, the newly-launched Cursor 16 engine received the "Diesel of the Year 2014" award from Diesel magazine. The engine is designed for the high-powered off-road market and applications will include New Holland and Case IH combines.
  • At NGVA Europe in June, CNH Industrial displayed the Euro VI natural gas F1C and Cursor 8 engines which went into production earlier in the year.
  • In April, the first F1C with ULEV 34 (Ultra-low emission vehicle) homologation went into production at the Foggia powertrain plant. The engine's first application will be on the RAM Promaster sold by Chrysler in North America.
  • Powertrain signed an alliance agreement with Cascade Engine Center LLC for distribution of its engines across the western USA and British Columbia, Canada. The deal will strengthen the Company's distribution capability in the marine sector in North America.

***

Case Construction Equipment, Iveco, New Holland Agriculture and Iveco Bus represented CNH Industrial as an official supporter of the FIA action for road safety campaign. The Company has renewed its role as supplier of the FIA World Touring Car Championship, demonstrating its comprehensive commitment to road safety.


About CNH Industrial

CNH Industrial N.V. is a global leader in the capital goods sector that, through its various businesses, designs, produces and sells agricultural and construction equipment, trucks, commercial vehicles, buses and specialty vehicles, in addition to a broad portfolio of powertrain applications. Present in all major markets worldwide, CNH Industrial is focused on expanding its presence in high growth markets, including through new joint ventures. Further information on CNH Industrial and its businesses is available on the corporate website www.cnhindustrial.com.

Additional Information

Today, at 2:30 p.m. GMT, management will hold a conference call to present 2014 second quarter and first half results to financial analysts and institutional investors. The call can be followed live and a recording will be available later on the Company's website (www.cnhindustrial.com). A presentation will be made available on the CNH Industrial website prior to the call.

Non-GAAP Financial Information

CNH Industrial monitors its operations through the use of several non-GAAP financial measures. CNH Industrial believes that these non-GAAP financial measures provide useful and relevant information regarding its results and enhance the reader's ability to assess CNH Industrial financial performance and financial position. They provide measures which facilitate management's ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. These and similar measures are widely used in the industries in which the Company operates. These financial measures may not be comparable to other similarly titled measures used by other companies and are not intended to be substitutes for measures of financial performance and financial position prepared in accordance with U.S. GAAP and/or IFRS.

CNH Industrial non-GAAP financial measures are defined as follows:

  • Operating Profit under U.S. GAAP: Operating Profit of Industrial Activities is defined as net sales less cost of goods sold, selling, general and administrative expenses and research and development expenses. Operating Profit of Financial Services is defined as revenues, less selling, general and administrative expenses, interest expenses and certain other operating expenses.
  • Trading Profit under IFRS: Trading Profit derived from financial information prepared in accordance with IFRS, is the internal financial measure management uses to assess the performance of operating segments. Trading Profit is defined as income before restructuring, gains/(losses) on disposal of investments and other unusual items, interest expense of Industrial Activities, income taxes, equity in income (loss) of unconsolidated subsidiaries and affiliates, non-controlling interests.
  • Operating Profit under IFRS: Operating Profit under IFRS is computed starting from Trading Profit under IFRS plus/minus restructuring costs, other income (expenses) that are unusual in the ordinary course of business (such as gains and losses on the disposal of investments and other unusual items arising from infrequent external events or market conditions).
  • Net income (loss) before restructuring and other exceptional items: it is defined as Net income (loss), less restructuring charges and exceptional items, after tax.
  • Net Debt and Net Debt of Industrial Activities (or Net Industrial Debt): CNH Industrial provides the reconciliation of Net Debt to Total Debt, which is the most directly comparable measure included in the consolidated balance sheets. Due to different sources of cash flows used for the repayment of the debt between Industrial Activities and Financial Services (by cash from operations for Industrial Activities and by collection of financing receivables for Financial Services), management separately evaluates the cash flow performance of Industrial Activities using Net Debt of Industrial Activities.
  • Working capital: it is defined as trade receivables and financing receivables related to sales, net, plus inventories, less trade payables, plus other assets (liabilities), net.
  • Constant Currency: CNH Industrial discusses the fluctuations in revenues and certain non-GAAP financial measures on a constant currency basis by applying the prior-year exchange rates to current year's values expressed in local currency in order to eliminate the impact of foreign exchange rate fluctuations.

Forward-looking statements

Certain statements contained in this earnings release that are not statements of historical fact constitute forward-looking statements, notwithstanding that such statements are not specifically identified. These statements may include terminology such as "may", "will", "expect", "could", "should", "intend", "estimate", "anticipate", "believe", "remain", "on track", "design", "target", "objective", "goal", "forecast", "projection", "outlook", "prospects", "plan", or similar terminology. Forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the Company's control and are difficult to predict. If any of these risks and uncertainties materialize or other assumptions underlying any of the forward-looking statements prove to be incorrect the actual results or developments may differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors, risks, and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others: the many interrelated factors that affect consumer confidence and worldwide demand for capital goods and capital goods-related products; general economic conditions in each of the Company's markets; changes in government policies regarding banking, monetary and fiscal policies; legislation, particularly relating to capital goods-related issues such as agriculture, the environment, debt relief and subsidy program policies, trade and commerce and infrastructure development; actions of competitors in the various industries in which the Company competes; development and use of new technologies and technological difficulties; production difficulties, including capacity and supply constraints and excess inventory levels; labor relations; interest rates and currency exchange rates; inflation and deflation; energy prices; housing starts and other construction activity; the Company's ability to obtain financing or to refinance existing debt; a decline in the price of used vehicles; the resolution of pending litigation and investigations; the Company's relations with Kobelco Construction Machinery Co., Ltd and Sumitomo (S.H.I.) Construction Machinery Co., Ltd.; the Company's pension plans and other post-employment obligations; political and civil unrest; volatility and deterioration of capital and financial markets, including further worsening of the Eurozone sovereign debt crisis, other similar risks and uncertainties; and the Company's success in managing the risks involved in the foregoing. Further information concerning factors, risks, and uncertainties that could materially affect the Company's financial results is included in our annual report on Form 20-F for the year ended December 31, 2013, prepared in accordance with U.S. GAAP and in our EU Annual Report at December 31, 2013, prepared in accordance with IFRS. Investors should refer and consider the incorporated information on risks, factors, and uncertainties in addition to the information presented here. Forward-looking statements speak only as of the date on which such statements are made. Furthermore, in light of ongoing difficult macroeconomic conditions, both globally and in the industries in which CNH Industrial operates, it is particularly difficult to forecast results, and any estimates or forecasts of particular periods that are provided in this earnings release are uncertain. Accordingly, investors should not place undue reliance on such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements. CNH Industrial does not undertake an obligation to update or revise publicly any forward-looking statements.

The Company's outlook is based upon assumptions relating to the factors described in the earnings release, which are sometimes based upon estimates and data received from third parties. Such estimates and data are often revised. The Company undertakes no obligation to update or revise its outlook or forward-looking statements, whether as a result of new developments or otherwise. Further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, is included in the Company's reports and filings with the U.S. Securities and Exchange Commission, the AFM and CONSOB.

 

Contacts




Media Inquiries

Investor Relations



Richard Gadeselli

Federico Donati

Tel: +44 1268 292468

Tel: +39 011 00 62756



Maurizio Pignata

Noah Weiss

Tel: +39 011 00 72122

Tel: +1 630 887 3745



e-mail: [email protected]


www.cnhindustrial.com


 

CNH INDUSTRIAL N.V.

Consolidated Statements of Operations

For The Three Months Ended June 30, 2014 and 2013 and For The Six Months Ended June 30, 2014 and 2013

(Unaudited)

(U.S. GAAP)


($ million)

Three Months Ended June 30,


Six Months Ended June 30,

2014


2013


2014


2013

Revenues








Net sales

8,564


8,529


15,775


15,783

Finance and interest income

347


300


676


597

TOTAL REVENUES

8,911


8,829


16,451


16,380

Costs and Expenses








Cost of goods sold

6,922


6,851


12,799


12,765

Selling, general and administrative expenses

752


765


1,504


1,490

Research and development expenses

298


297


555


561

Restructuring expenses

30


20


42


29

Interest expense

338


301


649


573

Other, net

86


67


198


170

TOTAL COSTS AND EXPENSES

8,426


8,301


15,747


15,588

INCOME BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

485


528


704


792

Income taxes

158


221


301


359

Equity in income of unconsolidated subsidiaries and affiliates

31


41


56


66

NET INCOME

358


348


459


499

Net income attributable to noncontrolling interests

4


65


5


105

NET INCOME ATTRIBUTABLE TO CNH INDUSTRIAL N.V.

354


283


454


394









(in $)








Earnings per share attributable to common shareholders








Basic

0.26


0.23


0.33


0.32

Diluted

0.26


0.23


0.33


0.32










These Consolidated Statements of Operations should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2013 included in the Annual Report on Form 20-F. These Consolidated Statements of Operations represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

CNH INDUSTRIAL N.V.

Condensed Consolidated Balance Sheets

As of June 30, 2014 and December 31, 2013

(Unaudited)

(U.S. GAAP)


($ million)


June 30, 2014


December 31, 2013

Cash and cash equivalents


4,615


5,567

Restricted cash


751


922

Trade receivables, net


1,276


1,362

Financing receivables, net


23,238


21,976

Inventories, net


8,834


7,410

Property, plant and equipment, net


7,227


7,090

Investments in unconsolidated subsidiaries and affiliates


645


645

Equipment under operating leases


1,234


1,059

Goodwill


2,504


2,504

Other intangible assets, net


773


810

Deferred tax assets


1,898


1,679

Derivative assets


115


261

Other assets


2,432


2,558

TOTAL ASSETS


55,542


53,843

Debt


31,339


29,866

Trade payables


7,111


7,369

Deferred tax liabilities


493


385

Pension, postretirement and other post-employment benefits


2,414


2,427

Derivative liabilities


178


94

Other liabilities


8,851


8,735

Total liabilities


50,386


48,876

Redeemable noncontrolling interest


12


12

Equity


5,144


4,955

TOTAL EQUITY AND LIABILITIES


55,542


53,843







These Condensed Consolidated Balance Sheets should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2013 included in the Annual Report on Form 20-F. These Condensed Consolidated Balance Sheets represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

CNH INDUSTRIAL N.V.

Consolidated Statements of Cash Flows

For The Six Months Ended June 30, 2014 and 2013

(Unaudited)

(U.S. GAAP)

($ million)

Six Months Ended
June 30,

2014

2013

Operating activities:



Net income

459

499

Adjustments to reconcile net income to net cash used in operating activities:



Depreciation and amortization expense, net of assets under operating lease and assets sold under buy-back commitments

360

348

Depreciation and amortization expense of assets under operating lease and assets sold under buy-back commitments

196

179

Loss (gain) from disposal of assets

1

-

Undistributed income of unconsolidated subsidiaries

4

(9)

Other non cash items

88

103

Changes in operating assets and liabilities:



Provisions

193

221

Deferred income taxes

(38)

(104)

Trade and financing receivables related to sales, net

(1,317)

(1,642)

Inventories, net

(1,380)

(1,438)

Trade payables

(271)

601

Other assets and liabilities

126

(91)

NET CASH USED IN OPERATING ACTIVITIES

(1,579)

(1,333)

Investing activities:



Net collections of retail receivables

202

(195)

Proceeds from the sale of assets, net of assets under operating leases and assets sold under buy-back commitments

10

-

Proceeds from the sale of assets previously under operating leases and assets sold under buy-back commitments

268

239

Expenditures for property, plant and equipment and intangible assets, net of assets under operating lease and assets sold under buy-back commitments

(354)

(401)

Expenditures for assets under operating leases and assets sold under buy-back commitments

(773)

(582)

Other

292

244

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(355)

(695)

Financing activities:



Net increase in debt

1,326

1,368

Dividends paid

(379)

(363)

Other

6

(5)

NET CASH PROVIDED BY FINANCING ACTIVITIES

953

1,000

Effect of foreign exchange rate changes on cash and cash equivalents

29

(81)

DECREASE IN CASH AND CASH EQUIVALENTS

(952)

(1,109)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

5,567

5,199

CASH AND CASH EQUIVALENTS, END OF PERIOD

4,615

4,090


These Consolidated Statements of Cash Flows should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2013 included in the Annual Report on Form 20-F. These Consolidated Statements of Cash Flows represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

CNH INDUSTRIAL N.V.

Supplemental Statements of Operations

For The Three Months Ended June 30, 2014 and 2013 and For The Six Months Ended June 30, 2014 and 2013

(Unaudited)

(U.S. GAAP)


Industrial Activities


Financial Services

($ million)

Three Months Ended June 30,

Six Months Ended June 30,


Three Months Ended June 30,

Six Months Ended

June 30,

2014

2013

2014

2013


2014

2013

2014

2013

Revenues










Net sales

8,564

8,536

15,777

15,793


-

-

-

-

Finance and interest income

66

65

126

133


468

414

908

831

TOTAL REVENUES

8,630

8,601

15,903

15,926


468

414

908

831

Costs and Expenses










Cost of goods sold

6,922

6,858

12,801

12,775


-

-

-

-

Selling, general and administrative expenses

666

695

1,331

1,350


86

70

173

140

Research and development expenses

298

297

555

561


-

-

-

-

Restructuring expenses

30

20

42

29


-

-

-

-

Interest expense

224

199

419

379


178

161

350

327

Interest compensation to Financial Services

94

86

180

165


-

-

-

-

Other, net

58

63

147

116


57

38

109

123

TOTAL COSTS AND EXPENSES

8,292

8,218

15,475

15,375


321

269

632

590

INCOME BEFORE INCOME TAXES AND EQUITY IN INCOME OF UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES

338

383

428

551


147

145

276

241

Income taxes

111

168

206

268


47

53

95

91

Equity in income of unconsolidated subsidiaries and affiliates

27

37

48

59


4

4

8

7

Result from intersegment Investments

104

96

189

157


1

-

2

(2)

NET INCOME

358

348

459

499


105

96

191

155

Net income attributable to noncontrolling interests

4

65

5

105


-

13

-

23

NET INCOME ATTRIBUTABLE TO CNH INDUSTRIAL N.V.

354

283

454

394


105

83

191

132


These Supplemental Statements of Operations are presented for informational purposes.  The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.'s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.'s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.

CNH INDUSTRIAL N.V.

Condensed Supplemental Balance Sheets

As of June 30, 2014 and December 31, 2013

(Unaudited)

(U.S. GAAP)


Industrial Activities

Financial Services

($ million)

June 30, 2014

December 31, 2013

June 30, 2014

December 31, 2013

Cash and cash equivalents

3,699

4,010

916

1,557

Restricted cash

5

-

746

922

Trade receivables, net

1,265

1,338

87

88

Financing receivables, net

5,610

5,826

24,758

23,640

Inventories, net

8,742

7,314

92

96

Property, plant and equipment, net

7,222

7,085

5

5

Investments in unconsolidated subsidiaries and affiliates

3,193

3,049

142

129

Equipment under operating leases

27

34

1,207

1,025

Goodwill

2,340

2,340

164

164

Other intangible assets, net

750

796

23

14

Deferred tax assets

1,604

1,437

294

242

Derivative assets

108

254

9

10

Other assets

1.902

1,884

914

1,040

TOTAL ASSETS

36,467

35,367

29,357

28,932

Debt

12,923

11,948

25,546

25,408

Trade payables

6,998

7,162

190

273

Deferred tax liabilities

296

225

197

160

Pension, postretirement and other post-employment benefits

2,395

2,419

19

8

Derivative liabilities

164

78

16

19

Other liabilities

8,535

8,568

698

531

Total liabilities

31,311

30,400

26,666

26,399

Redeemable noncontrolling interest

12

12

-

-

Equity

5,144

4,955

2,691

2,533

TOTAL EQUITY AND LIABILITIES

36,467

35,367

29,357

28,932


These Condensed Supplemental Balance Sheets are presented for informational purposes.  The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.'s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.'s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.

CNH INDUSTRIAL N.V.

Supplemental Statements of Cash Flows

For The Six Months Ended June 30, 2014 and 2013

(Unaudited)

(U.S. GAAP)


Industrial Activities

Financial Services

($ million)

Six Months Ended June 30,

Six Months Ended June 30,

2014

2013

2014

2013

Operating activities:





Net income

459

499

191

155

Adjustments to reconcile net income to net cash used in operating activities:





Depreciation and amortization expense, net of assets under operating lease and assets sold under buy-back commitments

358

346

2

2

Depreciation and amortization expense of assets under operating lease and assets sold under buy-back commitments

125

119

71

60

Loss (gain) from disposal of assets

-

1

1

(1)

Undistributed income of unconsolidated subsidiaries

(87)

68

(10)

1

Other non cash items

27

71

61

32

Changes in operating assets and liabilities:





Provisions

165

194

28

27

Deferred income taxes

(29)

(89)

(9)

(15)

Trade and financing receivables related to sales, net

84

(240)

(1,413)

(1,407)

Inventories, net

(1,384)

(1,440)

4

2

Trade payables

(174)

652

(84)

(53)

Other assets and liabilities

(147)

(132)

272

48

NET CASH USED IN OPERATING ACTIVITIES

(603)

49

(886)

(1,149)

Investing activities:





Net collections of retail receivables

-

-

202

(195)

Proceeds from the sale of assets, net of assets under operating leases and assets sold under buy-back commitments

10

-

-

-

Proceeds from the sale of assets previously under operating leases and assets sold under buy-back commitments

138

105

130

134

Expenditures for property, plant and equipment and intangible assets, net of assets under operating lease and assets sold under buy-back commitments

(342)

(400)

(12)

(1)

Expenditures for assets under operating leases and assets sold under buy-backcommitments

(372)

(309)

(401)

(273)

Other

96

54

182

190

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

(470)

(550)

101

(145)

Financing activities:





Net increase (decrease) in debt

1,124

324

202

1,044

Dividends paid

(379)

(363)

(90)

(233)

Other

6

(5)

14

-

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

751

(44)

126

811

Effect of foreign exchange rate changes on cash and cash equivalents

11

(43)

18

(38)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(311)

(588)

(641)

(521)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

4,010

3,890

1,557

1,309

CASH AND CASH EQUIVALENTS, END OF PERIOD

3,699

3,302

916

788







These Supplemental Statements of Cash Flows are presented for informational purposes.  The supplemental Industrial Activities data in these statements (with Financial Services on the equity basis) include CNH Industrial N.V.'s Agricultural Equipment, Construction Equipment, Commercial Vehicles and Powertrain segments, as well as corporate functions. The supplemental Financial Services data in these statements refer to CNH Industrial N.V.'s Financial Services segment. Transactions between Industrial Activities and Financial Services have been eliminated to arrive at the consolidated financial statements.

CNH INDUSTRIAL N.V.

Other Supplemental Financial Information

(Unaudited)


(U.S. GAAP)


Net Income and basic EPS before Restructuring and Exceptional Items

($ million, except per share data)


Six Months Ended June 30,


Three Months Ended June 30,



2014

2013


2014

2013



459

499

Net income

358

348



36

29

Restructuring expenses, net of tax

24

20



64

25

Other exceptional items, net of tax

-

-



559

553

Net income before restructuring and other exceptional items

382

368



554

448

Net income before restructuring and other exceptional items attributable to CNH Industrial N.V.

378

303



1,353

1,223

Weighted average shares outstanding (million)

1,354

1,223



0.41

0.37

Basic EPS before restructuring and exceptional items ($)

0.28

0.25



 

Industrial Activities Cash Provided (Used) by Working Capital   ($ million)




Balance as of December 31, 2013

Effect of Foreign Currency Translation and Non-Cash Transactions

Balance as of June 30, 2014

Cash Provided (Used) by Working Capital



Trade and financing receivables related to sales, net


1,395

7

1,318

84



Inventories, net


7,314

34

8,742

(1,394)



Trade payables


7,162

10

6,998

(174)



Other assets and liabilities, net


(777)

(158)

(675)

(260)



Industrial Activities cash provided (used) by working capital


770

(127)

2,387

(1,744)



 

Translation of financial statements denominated in a currency other than the U.S. dollar

The principal exchange rates used to translate into U.S. dollars the financial statements prepared in currencies other than the U.S. dollar were as follows:


1st Half 2014


At December 31, 2013


1st Half 2013


Average

At June 30




Average

At June 30

Euro

0.730

0.732


0.725


0.762

0.765

Pound sterling

0.599

0.587


0.605


0.648

0.655

Swiss franc

0.891

0.890


0.890


0.937

0.934

Polish zloty

3.047

3.043


3.012


3.181

3.316

Brazilian real

2.298

2.197


2.362


2.031

2.209

Argentine peso

7.825

8.130


6.518


1.813

1.927

Turkish lira

2.165

2.121


2.147


5.123

5.375

CNH INDUSTRIAL N.V.

Consolidated Income Statement

For The Three Months Ended June 30, 2014 and 2013 and For The Six Months Ended June 30, 2014 and 2013

(Unaudited)

(IFRS)


($ million)


2nd Quarter 2014

2nd Quarter 2013(*)

1st Half 2014

1st Half 2013 (*)

Net revenues


9,008

8,922

16,652

16,580

Cost of sales


7,249

7,126

13,438

13,323

Selling, general and administrative costs


719

750

1,438

1,453

Research and development costs


220

197

428

398

Other income/(expenses)


(19)

(21)

(37)

(40)

TRADING PROFIT/(LOSS)


801

828

1,311

1,366

Gains/(losses) on the disposal of investments


-

-

-

-

Restructuring costs


35

9

65

19

Other unusual income/(expenses)


(10)

(16)

(10)

(57)

OPERATING PROFIT/(LOSS)


756

803

1,236

1,290

Financial income/(expenses)


(179)

(153)

(394)

(302)

Result from investments:


30

43

56

69

Share of the profit/(loss) of investees accounted for using the equity method


30

43

56

68

Other income/(expenses) from investments


-

-

-

1

PROFIT/(LOSS) BEFORE TAXES


607

693

898

1,057

Income taxes


204

264

349

402

PROFIT/(LOSS) FROM CONTINUING OPERATIONS


403

429

549

655

Profit/(loss) from discontinued operations


-

-

-

-

PROFIT/(LOSS) FOR THE PERIOD


403

429

549

655







PROFIT/(LOSS) FOR THE PERIOD ATTRIBUTABLE TO:






Owners of the parent


399

356

544

538

Non-controlling interests


4

73

5

117



















(in $)






BASIC EARNINGS/(LOSS) PER COMMON SHARE


0.29

0.29

0.40

0.44

DILUTED EARNINGS/(LOSS) PER COMMON SHARE


0.29

0.29

0.40

0.44


(*) Amounts recast in order to reflect the change in presentation currency from Euro to U.S. dollar.

 

These Consolidated Income Statements should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2013 included in the EU Annual Report. These Consolidated Income Statements represent the consolidation of all CNH Industrial N.V. subsidiaries.

CNH INDUSTRIAL N.V.

Consolidated Statement of Financial Position

As of June 30, 2014 and December 31, 2013

(Unaudited)

(IFRS)


($ million)


June 30, 2014

December 31, 2013 (*)

ASSETS




Intangible assets


6,147

6,046

Property, plant and equipment


7,115

6,967

Investments and other financial assets:


762

758

Investments accounted for using the equity method


674

674

Other investments and financial assets


88

84

Leased assets


1,234

1,059

Defined benefit plan assets


42

44

Deferred tax assets


1,788

1,672

Total Non-current assets


17,088

16,546

Inventories


8,948

7,536

Trade receivables


1,276

1,362

Receivables from financing activities


23,240

21,986

Current tax receivables


398

348

Other current assets


1,679

1,900

Current financial assets:


115

261

Current securities


-

-

Other financial assets


115

261

Cash and cash equivalents


5,366

6,489

Total Current assets


41,022

39,882

Assets held for sale


29

34

TOTAL ASSETS


58,139

56,462

EQUITY AND LIABILITIES




Issued capital and reserves attributable to owners of the parent


7,846

7,591

Non-controlling interests


59

71

Total Equity


7,905

7,662

Provisions:


6,661

6,528

Employee benefits


2,620

2,713

Other provisions


4,041

3,815

Debt:


31,355

29,946

Asset-backed financing


14,312

14,727

Other debt


17,043

15,219

Other financial liabilities


178

94

Trade payables


7,111

7,369

Current tax payables


309

418

Deferred tax liabilities


343

302

Other current liabilities


4,277

4,143

Liabilities held for sale


-

-

Total Liabilities


50,234

48,800

TOTAL EQUITY AND LIABILITIES


58,139

56,462


(*)   Amounts recast in order to reflect the change in presentation currency from Euro to U.S. dollar.


These Consolidated Statements of Financial Position should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2013 included in the EU Annual Report. These Consolidated Statements of Financial Position represent the consolidation of all CNH Industrial N.V. subsidiaries.

CNH INDUSTRIAL N.V.

Consolidated Statement of Cash Flows

For The Six Months Ended June 30, 2014 and 2013

(Unaudited)

(IFRS)


($ million)


1st Half 2014

1st Half 2013 (*)

A) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


6,489

6,084

B) CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES DURING THE PERIOD:




Profit/(loss) for the period


549

655

Amortization and depreciation (net of vehicles sold under buy-back commitments and operating lease)


557

495

(Gains)/losses from disposal of non-current assets (net of vehicles sold under buy-back commitments)


(1)

2

Other non-cash items


18

16

Dividends received


60

56

Change in provisions


120

37

Change in deferred income taxes


(7)

(64)

Change in items due to buy-back commitments (a)


16

49

Change in operating lease items (b)


(196)

(76)

Change in working capital


(1,456)

(971)

TOTAL


(340)

199

C) CASH FLOWS FROM/(USED IN) INVESTMENT ACTIVITIES:




Investments in:




Property, plant and equipment and intangible assets (net of vehicles sold under buy-back commitments and operating lease)


(691)

(717)

Consolidated subsidiaries and other equity investments


(5)

(82)

Proceeds from the sale of non-current assets (net of vehicles sold under buy-back)


10

-

Net change in receivables from financing activities


(1,151)

(1,516)

Change in current securities


-

3

Other changes


76

43

TOTAL


(1,761)

(2,269)

D) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:




Bonds issued


1,868

600

Issuance of other medium-term borrowings


1,767

1,153

Repayment of other medium-term borrowings


(1,679)

(1,226)

Net change in other financial payables and other financial assets/liabilities


(639)

714

Capital increase


6

-

Dividends paid


(379)

(363)

(Purchase)/sale of ownership interests in subsidiaries


-

(5)

TOTAL


944

873

Translation exchange differences


34

(103)

E) TOTAL CHANGE IN CASH AND CASH EQUIVALENTS


(1,123)

(1,300)

F) CASH AND CASH EQUIVALENTS AT END OF PERIOD


5,366

4,784



(*)  

Amounts recast in order to reflect the change in presentation currency from Euro to U.S. dollar.

(a)  

The cash flows generated by the sale of vehicles under buy-back commitments, net of the amounts included in Profit/(loss) for the period, are included under operating activities in a single line item which includes changes in working capital, capital expenditures, depreciation and impairment losses. This item also includes gains and losses arising from the sales of vehicles transferred under buy-back commitments that occur before the end of the agreement term without repossession of the vehicle.

(b) 

Cash flows generated during the period by operating lease arrangements are included in operating activities in a single line item which includes capital expenditures, depreciation, impairment losses and changes in inventories.


These Consolidated Statement of Cash Flows should be read in conjunction with the Company's Audited Consolidated Financial Statements and Notes for the Year Ended December 31, 2013 included in the EU Annual Report. These Consolidated Statement of Cash Flows represent the consolidation of all CNH Industrial N.V. subsidiaries.

 

 

SOURCE CNH Industrial

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