CNH Industrial Capital originations drop 6.5% in Q3
30-plus-days delinquencies increased 60 basis points YoY
The financing arm of CNH Industrial saw originations slide and delinquencies rise in the third quarter amid continued challenges facing the agriculture sector, particularly in South America.
CNH Industrial Capital reported a net loss of $77 million in Q3, compared with a $47 million profit a year prior, “primarily reflecting a $156 million noncash valuation allowance against deferred tax assets in Brazil due to ongoing elevated delinquencies,” Chief Financial Officer James Nickolas said during today’s earnings call.
The OEM captive reported in Q3:
- Total revenue fell 2.8% year over year to $684 million;
- Retail loan originations declined 6.5% YoY to $2.5 billion;
- Its managed portfolio decreased 2.5% YoY to $27.8 billion; and
- 30-plus-day delinquencies landed at 4.1%, up 0.6 percentage points YoY.
Meanwhile, the parent company’s total revenue dipped 1% YoY to $4.4 billion, according to today’s earnings release. Agriculture net sales fell 1.9% YoY to $2.9 billion, and construction net sales rose 5.1% YoY to $777 million.
The drop in agriculture equipment sales came as “farmer profitability continues to be squeezed due to low commodity prices and high input costs,” Chief Executive Gerrit Marx said during the call.
CNH has positioned itself as a “pure-play agriculture equipment, technology and services company” after selling 70% of its construction business to Japanese OEM Kobelco Construction Machinery, forming a new joint venture called CE JV, Marx said.
CNH Industrial Capital will provide “a full range of retail financing, leases, rental programs and insurance products to CE JV,” Nickolas said.
The company expects the sale to close by the end of 2027.
Shares of CNH Industrial [NYSE: CNH] rose 10.9% from market open to $12.82 as of market close today. It has a market capitalization of $15.9 billion.
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