Latin America lifts CNH construction

By Chris Sleight23 July 2008

CNH's construction equipment sales rose +7.5% to US$ 2.61 million in the first half of the year, compared to the same period in 2007. However, operating profit for its construction equipment division fell -39% to US$ 123 million, reducing the margin from 8.2% in H1 2007 to 4.7% in 2008 to date.

CNH said the drop in profitability was due to a decline in its unit volume sales combined with higher selling general and administrative expenses, among other factors.

Commenting on the results, CNH president and CEO, Harold Boyanovsky said, "Our Construction Equipment business grew sales, driven by growth in Latin America and Rest-of-World which more than offset declining market conditions in North America and Western Europe."

Commenting on the market outlook for construction equipment, a statement from CNH said, "Our outlook for the global construction industry is for growth in heavy equipment industry sales to offset a decline in light equipment industry sales. We expect continuing strength in Latin American and Rest-of-World markets driven by growing economies and infrastructure spending.

"We expect construction demand in Western Europe to decline from recent record levels as GDP growth and construction activity levels weaken, but that demand will remain at high levels compared with recent history.

"Driven largely by weakness in the housing market, the North American construction outlook remains soft and we expect North American construction demand to continue its decline for the remainder of the year from already low levels."

As a group, CNH saw much stronger growth in its agricultural equipment sales than in construction over the first half of the year. As a result, its total revenues for the first half of the year were up +28% to US$ 9.91 billion. Its net profit was up +42% to US$ 459 million.

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