# Case/New Holland posts end of year profit, but stock goes down



## bontai Joe (Sep 16, 2003)

UPDATE 3-CNH Global posts profit, but shares fall
Thu Feb 3, 2005 01:03 PM ET 
(Adds analyst comment, byline; updates stock price)
By Karen Padley

CHICAGO, Feb 3 (Reuters) - CNH Global NV (CNH.N: Quote, Profile, Research) on Thursday reported a fourth-quarter profit, reversing a year-earlier loss, as the farm equipment maker was helped by strong sales of construction machinery.

Analysts, however, pointed to weak margins in the company's agricultural equipment business and noted its 2005 earnings outlook fell short of current estimates. CNH shares dropped 2.6 percent.

"While the company's earnings per share came in-line with our estimate, the quarter was disappointing as CNH agricultural equipment profitability declined from a year ago, despite a global cyclical upturn," wrote Merrill Lynch analyst Andrew Obin in a research note. He has a "neutral" rating on the stock.

The company, majority-owned by Italy's Fiat SpA (FIA.MI: Quote, Profile, Research) , said it earned $26 million, or 11 cents a share, in the fourth quarter, compared with a year-earlier loss of $111 million, or 84 cents a share.

Before restructuring charges in both periods, CNH would have earned $48 million, or 21 cents a share, compared with $29 million, or 22 cents a share.

Analysts' estimates averaged 17 cents a share, in a range from 13 cents to 24 cents, according to Reuters Estimates.

Revenue increased to $3.0 billion from $2.86 billion.

Sales of construction equipment rose 21 percent while agricultural equipment sales were little changed. Without the impact of the weaker U.S. dollar, construction sales would have risen 16 percent and agricultural sales would have fallen 5 percent.

The Lake Forest, Illinois, company said it produced less agricultural equipment than its dealers sold in an attempt to reduce inventories by about 15 percent.

As a result, CNH said its industrial operating margin at agriculture equipment narrowed to 2.0 percent from 5.0 percent a year earlier. It defines industrial operating margin as net sales less the cost of goods sold.

CNH also gave a more pessimistic industry outlook for 2005 than many of its competitors, saying it expects worldwide unit sales of agricultural equipment to be flat and construction equipment to be flat to down 5 percent.

It estimated the company's first-quarter net income before restructuring charges will be about the same as a year ago, or about 3 cents a share.

That is below analysts' estimates, which have ranged from 14 cents to 20 cents a share, for an average of 17 cents.

It cited higher steel costs and plans for a smaller inventory build, mainly for combines in the Americas.

The company also estimated that its net equipment sales will increase about 5 percent in 2005. The company expects full-year profit to increase about 15 percent, depending on market conditions and commodity costs.

Analysts' 2005 estimates for earnings before charges have averaged $1.25 a share, about 50 percent higher than the 83 cents reported this year.

CNH Global shares fell 49 cents to $18.18 in afternoon trading on the New York Stock Exchange.


© Reuters 2005. All Rights Reserved.


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