Agricultural and costruction equipment

CNH – Case New Holland

HIGHLIGHTS

(€ million)    2010  2009
Net revenues   11,906
 10,107
Trading profit/(loss)    755
 337
Operating profit/(loss) (*)    754
 251
Investments in tangible and intangible assets (**)    446
 330
 of which capitalized R&D costs    200
 151
Total R&D expenditure (***)    346
 283
No. of employees at year end    28,831
 28,466
(*) Includes restructuring costs and other unusual income/(expense) (**) Net of vehicles leased out (***) Includes capitalized R&D and R&D charged directly to the income statement

COMMERCIAL PERFORMANCE

In 2010, worldwide agricultural equipment industry retail unit sales increased 8% over the prior year with improvements in all regions except Western Europe, where demand remained below historical norms. Global demand was up 8% for tractors and 2% for combines. In North America, tractor sales increased 5% and combine sales were up 9% on the back of strong commodity prices and very solid farm income. In Latin America, tractor sales climbed 20% and combine sales jumped 29% on strong economic fundamentals and stability in government support for the agricultural sector. Western European markets declined for the year with tractor sales down 9% and combines falling 29%. There were signs of a recovery in demand in the fourth quarter with tractor sales increasing 12% over the same period in 2009. Rest of World markets reported a 13% growth in tractor sales and a 3% increase for combines.

 

CNH’s global market share for tractors was largely in line with the prior year. The sector maintained share in Western Europe, despite the decline for the industry overall, and experienced a slight decrease in North America for under 40 hp and mid-sized utility tractors as it transitioned to new, more competitive products. CNH improved global share of the combine market driven by strong performance in Rest of World markets.

 

Global construction equipment industry unit sales rose 47% for the year, representing a recovery from the low base experienced in 2009. The market for light equipment was up 35% and the heavy segment rose 59%. In North America, demand improved 20% for light equipment and 14% for heavy equipment principally due to replacement of ageing fleets. In Western Europe, demand grew as the industry began to recover from the prior year’s low levels, and unit sales were up 23% for light equipment and 17% in the heavy segment. In Latin America, strong market performance was mainly driven by increased infrastructure spending, with sales growing 89% in the light equipment segment and 86% in heavy. In Rest of World markets, industry sales rose 50% for light equipment and 71% for heavy, driven by continued strong demand in the Asia-Pacific region, primarily in the heavy equipment segment in China.

 

CNH’s full year market share was in line with growth in demand across all segments and regions with the exception of Latin America, which was down due to local manufacturing capacity constraints for CNH for both light and heavy equipment. Plans to expand capacity were initiated at two facilities to accommodate future market growth and ensure targets for localization of production can be met.

 

CNH and KAMAZ finalized a joint venture agreement for the production of agricultural and construction equipment in the Russian Federation. This followed a preliminary agreement signed in October 2009. Once fully operational, CNH-KAMAZ Industry will have an annual production capacity of 4,000 units.

 

INNOVATION AND PRODUCTS

In North America, Case IH Agriculture launched the next generation of more powerful and fuel-efficient Steiger® and MAGNUM™ tractors, along with a new range Puma 130-160 series models with Continuous Variable Transmission (CVT). All models meet Tier 4A/Stage IIIB emission standards. In the US, the brand also released the new Farmall A series of tractors. In Brazil, Case IH launched new Axial-Flow combines, the Magnum 335 tractor and the Maxxum tractor with extended axle. Sale of the new Austoft 4000 sugar cane harvester was extended to Africa, India, Southeast Asia and China.

 

New Holland Agriculture launched the new T7, T8 and T9 tractors with Tier 4A/Stage IIIB-compliant Selective Catalytic Reduction (SCR) engines, as well as the new Braud 9000L grape harvester. The brand also introduced the Blue Power T7070 Auto Command and T7060 Power Command tractors in Europe and North America. In Europe, the 6-cylinder, 116 to 140 hp, T6000 Elite light-weight tractor, featuring electronic power management with power boost, was also launched. And in North America, the hydrogen-fueled NH2™ tractor made its debut.

 

Case Construction launched four new N Series loader backhoes in North America and a range of four Construction King T Series tractor loader backhoes in Europe. Case Construction’s 650L crawler dozer was named one of the “Top 20 Rollouts” of 2009 by Better Roads magazine. Trade press also presented Case Construction with an “Excellence in Equipment Engineering” award in the loader backhoe category for the 590 Super M+ Series 3 loader backhoe and recognition for the joystick steering in its Case E Series wheel loaders.

New Holland Construction launched the first models in its new range of wheeled excavators (the WE150, WE170 and WE190) and introduced the smallest mini-excavator in its range (the new E10SR). US magazine Construction Equipment named the New Holland Construction B Series loader backhoe as one of the “Top 100 Products of 2009”.

 

In the agricultural equipment segment, the CNH brands also received numerous awards and recognitions during 2010, including the AE50 awards from the American Society of Agricultural and Biological Engineers for commitment to innovation, 7 of which went to New Holland Agriculture and 3 to Case IH. At the Esposizione Internazionale delle Macchine Agricole in Italy, New Holland was awarded the “Golden Tractor for Design 2011” for its T7.210 Auto Command™ and the award for innovation for the FR 9000 forage harvester with IntelliFill™ system, which also received a “Gold Medal” at Agrosalon 2010 in Russia. New Holland Agriculture was awarded six innovation awards at the International Agricultural Equipment Fair in Zaragoza, Spain, and two prestigious GOOD DESIGN™ awards in Chicago.

 

SERVICES

CNH Customer Care operates through Customer Service Centers located in its major geographical areas, which represent an important point of contact between CNH brands and their customers. During 2010, CNH focused on strengthening the service offer to customers in Latin America. In Brazil, CNH Customer Care launched a new toll-free service line at Expointer 2010 (one of the main trade shows in Brazil for the agricultural equipment sector) for Information Requests and Complaint Management.

 

In Europe and North America, CNH continued in its commitment to supporting the sales network and responding to the service needs of end customers through specific programs for each brand aimed at strengthening the relationship with customers and ensuring rapid service response to minimize downtime and maximize productivity.

 

Case IH continued to provide its Max ServiceSM program to customers in Europe and North America, offering, among other services, the 5 Star program which is specifically designed to give purchasers of a new model a preferred channel to contact the brand.

 

New Holland Agriculture, with its Top Service program, extended the coverage of its Break Down Assistance program to new models of round balers, telehandlers, and T6000 tractors.

 

Case Construction continued to operate its Customer Assistance program and, in Europe, New Holland Construction (through its Customer Service) leveraged the Lead Management program to increase its reach to potential new customers.

 

CNH Technical Service continued to focus on strengthening the ability of dealers to provide high-quality technical support to customers. New electronic repair manuals (e-Tim, or Technical Information Manuals, rolled out in 2010 to dealers for CNH agricultural brands in North America and Europe) were made available to dealers online, providing technicians in the field with repair information in a simple-to-navigate user interface. Feedback has been very positive.

 

Furthermore, new developments in diagnostic technology have enabled the expansion of Electronic Service Tools to include a dynamic data recorder that enables dealer technicians to more quickly diagnose product issues, reducing machine downtime and repair costs.

 

CNH offers financial services in North America, Europe, Brazil and Australia through a comprehensive range of financial products such as dealer and end-customer financing, finance leases, operating leases, credit cards, equipment rental programs and insurance products. Differentiated financial services are offered for both the Agricultural Equipment and Construction Equipment businesses.

 

In North America, the activity is carried out through wholly-owned financial services companies that support the sector’s sales through dealer and end-customer financing, as well as medium-to-long term operating leases. CNH Capital also provides financial services to Maserati in the United States.

 

In Europe, end-customer financing is primarily managed through CNH Capital Europe S.a.S., a joint venture with BNP Paribas Group (49.9% owned by CNH and accounted for under the equity method) that operates in Italy, France, Germany, Belgium, the Netherlands, Luxembourg, the UK and Austria.

 

Vendor programs with banking partners also exist in France, Spain, Portugal, Denmark and Poland. Dealer and end-customer financing activities not managed by the joint venture with BNP Paribas are managed through captive financial services subsidiaries.

 

In Brazil, Banco CNH Capital S.A., a captive financial services company, offers both dealer and end-customer financing. For end-customer financing, the company mainly serves as intermediary for funding provided by the Banco Nacional de Desenvolvimento Economico e Social (BNDES), a federally-owned company connected to the Brazilian Ministry of Development, Industry and Foreign Trade. Vendor programs offered jointly with banking partners are also in place.

 

In Australia, CNH offers dealer and end-customer financing through a captive financial services company.

© 2011 FIAT S.p.A - P.IVA 00469580013