The sentiment that 2024 is a year that machinery manufacturers would prefer to forget was reinforced this week, as agricultural and construction machinery company CNH released its quarterly and full-year results.
The headline figures show a decline of 28% in revenue for the final quarter of 2024, while full-year consolidated income declined by 20% on the back of lower industry demand for agriculture and construction equipment.
The actual sales total for the fourth quarter reached $176 million (£142m), while the full-year net income was $1.259 billion (£1.015bn).
The company pointed out that the results reflect a reduction in the number of machines in the distribution pipeline and what it describes as “continued execution of cost savings initiatives”.
Production cuts
Earlier in 2024, as the downturn in sales took hold, CNH set various targets to contain the damage, chief among them was reducing dealer inventories and clearing out old stock.
In the report, the corporation noted its success in this aim, with agriculture dealer inventory going down in the fourth quarter by over $700 million (£565m) due to CNH’s focus on retail sales support and 34% fewer production hours.
This was achieved with what the company terms “reasonable margin erosion”, or discounting, although it’s unclear how CNH defined “reasonable”.
Gloomy outlook at CNH
The board at CNH is not expecting much change in the near future and is settling in for a quiet start to 2025, with reduced production levels continuing to ensure that stock levels remain low.
This is in anticipation of sales growth as farmers return to updating their machinery fleets as part of the agricultural business cycle in the years ahead.
The lower production levels will naturally impact total sales revenue in 2025, although a parallel reduction in operating costs should mitigate against profit erosion, it claimed.
Consequently CNH is approaching 2025 with some caution, suggesting that agricultural sales will be down by up to 18%, while construction sales may also decline by between 5% and 10%.
