CNH Industrial published results for the three months ended March 31, 2025. Net income reached $132 million, compared with net income of $369 million for the three months ended March 31, 2024. Consolidated revenues were $3.83 billion (down 21% compared to Q1 2024) and net sales of Industrial Activities were $3.17 billion (down 23% compared to Q1 2024.
“Despite the challenging market conditions, CNH remains committed to driving operational excellence and advancing technologies”, says Gerrit Marx, Chief Executive Officer CNH. “Our focus on reducing dealer inventories and managing costs has positioned us to weather the current macroeconomic uncertainties, and our balanced global exposure allows us to continue providing excellent products and services to our customers. We are confident in our strategic initiatives and the dedication of our team to execute them.”
The decline in Net sales of Industrial Activities was mainly due to lower shipments on decreased industry demand and dealer destocking. Adjusted net income was $132 million, compared to $388 million in Q1 2024. The decrease in adjusted net income is primarily due to the lower shipment volumes in Agriculture and Construction.
Cash flow provided by operating activities in the quarter was $162 million ($894 million used in Q1 2024). Free cash flow of Industrial Activities was an outflow of $567 million, a year-over-year improvement of $642 million mainly driven by lower seasonal inventory growth.
Regional differences
In North America, industry volume was down 12% year-over-year in the first quarter for tractors under 140 HP and was down 24% for tractors over 140 HP; combines were down 51%. In Europe, Middle East and Africa (EMEA), tractor and combine demand was down 23% and 34%, respectively. South America tractor and combine demand was up 10% and 1%, respectively, inverting the negative trend of previous quarters. Asia Pacific tractor demand was up 12%, while combine demand was down 12%.
Agriculture net sales decreased in the quarter by 23% to $2.58 billion versus the same period of 2024, primarily due to lower shipment volumes on decreased industry demand across all regions and dealer destocking.
Adjusted EBIT decreased to $139 million ($388 million in Q1 2024) driven by the lower shipment volumes, partially offset by improved purchasing and manufacturing costs, and a continued reduction in SG&A expenses. R&D investments accounted for 6.3% of sales (6.0% in Q1 2024). Adjusted EBIT margin was 5.4% (11.5% in Q1 2024).
Global industry volume for construction equipment increased 2% year-over-year in the first quarter for Heavy construction equipment; Light construction equipment was down 6%. Aggregated demand decreased 11% in North America, 9% in EMEA, and 1% in South America, but increased 7% in Asia Pacific.
Construction net sales decreased in the quarter by 22% to $591 million, due to lower shipment volumes driven by the market decline.
Adjusted EBIT decreased to $14 million ($51 million in Q1 2024) as a result of lower shipment volumes and unfavorable net price realization, partially offset by improved purchasing and manufacturing costs, and a continued reduction in SG&A expenses. Adjusted EBIT margin was 2.4% (6.7% in Q1 2024).
Currency translation
Revenues of Financial Services decreased by 5% as a result of the negative impact from currency translation, lower yields primarily in South America, and lower used equipment sales related to decreased operating lease maturities; partially offset by favorable volumes in all regions except EMEA.
Net income was $90 million in the first quarter, a decrease of $28 million versus the same period of 2024, primarily due to increased risk costs in South America and North America, higher effective tax rate due to prior year Argentina inflation adjustment, and lower recoveries on used equipment sales; partially offset by favorable volumes and interest margin improvements in most regions.
Outlook 2025
The Company forecasts that 2025 global industry retail sales will be lower in both the agriculture and construction equipment markets when compared to 2024. In addition, CNH is focused on driving down excess channel inventory primarily by producing fewer units than the retail demand level. Therefore, 2025 net sales will be lower than in 2024.
The lower production and sales levels will negatively impact our segment margin results. However, the Company’s ongoing efforts to reduce its operating costs will partially mitigate the margin erosion. CNH is continuing to focus on reducing product costs through lean manufacturing principles and strategic sourcing. The Company will also carefully manage its SG&A and R&D expenses accordingly.
In addition to the lower cyclical industry sales, CNH has been evaluating multiple potential global trade scenarios. The uncertainty of those scenarios, including the amount and duration of tariffs levied, the policy reactions of U.S. trading partners, and the impact to our end customers, may affect our forecast for the year.
