Five years after they joined forces, CNH Industrial appears to be hatching plans to separate the agricultural division (Case IH, New Holland and Steyr) from Iveco trucks. In a recent interview with Bloomberg, CNH Industrial, CEO Richard Tobin stated that they could look at separating the agricultural portfolio from the rest of the industrial group.
Last year, CNH Industrial reported growth in all segments (agriculture, construction, powertrain and trucks). Sales for the agricultural division increased by 10% resulting in an operating profit of US$949 million (16%+ on 2016’s $818 million). The agriculture equipment unit generated about half of CNH’s 2017 profit on just 39% of its US$27 billion revenues. Globally sales performed well with the exception of North America, which remained flat due to carried over stock from the previous year that was still being sold by dealers in 2017. The company has also reduced its debts, making it interesting for investors.
The group reckons 2018 will continue the positive trend (worldwide demand for agri equipment is expected to improve with all regions flat to up 5% on average), and this could create an opportunity to separate CNH Industrial. Mr Tobin said in the interview “You could spin out individual businesses with very efficient balance sheets. I am not saying we will do this.” First though, they want to revamp Iveco before considering options.
