Case New Holland Industrial (CNH) reported its results for the first quarter (Q1) of 2025 earlier this month and, just like the other two big machinery names, the figures were not overly reassuring for shareholders.
This doom-laden reporting is something that the industry has become used to over the last year, with AGCO recording a 30% in Q1 sales last week.
However, the response of manufacturers across the industry to this situation is much the same, with widespread emphasis on reducing inventory.
For 2025, CNH is forecasting that its global industry retail sales will be lower in both its agriculture and construction equipment markets when compared to 2024.
End of the tunnel
However, this lack of optimism may be misplaced, as reports from dealers suggest that there is an uptick in interest from farmers and sales will at least match 2024 levels.
Like its competitors, CNH is focused on driving down excess channel inventory, primarily by producing fewer units than the retail demand level.
The manufacturer therefore is warning that net sales for 2025 will be lower than 2024.
Compare and contrast with this time last year, when any cut in production levels was being brought about by industrial action rather than a planned slowdown.
In May and June 2024, 500 workers that were part of Unite union at the CNH Basildon plant in England staged numerous strike actions over what they claimed was a broken promise by the company to calculate pay increases based on the average rate of inflation.
The Basildon dispute was settled in June 2024, although the much-feared and commented upon tractor shortage never materialised simply because the demand turned out not to be there.
Five-year-plan from CNH
The board at CNH has also taken time to reconsider its strategic five-year-plan, which was presented by chief executive Gerrit Marx as being based on four basic core pillars.
The first of these is ‘Breaking new ground on Iron + tech’, which introduces a new term into the lexicon of corporate phraseology, one that embraces the integration of old-style metal bashing with modern digital technology.
With regard to the former, CNH states that having updated its combine lines in 2024, the company is presently planning a full refresh of its entire tractor range with new products to appear next year.
The construction sector is also to benefit from new models, although this part of the corporation’s business is not so widely recognised in Ireland, and has been challenged by the revitalisation of the JCB dealership in the country.
Focus on margin
Throughout all this, the business of running a business dominates, for the other two core pillars concern financial matters, and especially those matters that support the return on investors capital.
The bottom line is that, to keep its shareholders happy, CNH is intending to increase margins on all products, indicating that if a reduction in price as a consequence of a reduction in volume was expected, then those hopes are misplaced.
Overall, the big machinery corporations have suffered a severe reduction in sales over the past year.
But there are ways the corporations can mitigate this decline, and even use it to their advantage, such as clearing out the old stock while nobody is expecting great financial results.
Looking further ahead, CNH appears confident that sales will rise again, but it has already written off 2025 and is pinning its hopes on 2026 as a year of recovery.
However, that recovery may well already be underway, if other reports from the industry are to be believed.
