CNH Industrial Capital scaled back on originations in the third quarter to focus on portfolio quality while avoiding riskier market sectors.
STATE OF PLAY: The parent company, heavy-equipment manufacturer CNH Industrial, reported a decline in global sales partly due to a beleaguered agriculture sector, Chief Executive Gerrit Marx said during today’s Q3 earnings call.
“Depressed commodity prices continue to weigh on farm income, and sentiment remains muted and uncertain across regions,” he said. “We’ve had low visibility on the industry cycle so far.”
The company also lowered production and shipment volumes in response to excessive dealer inventory, which was roughly $1 billion too high, Marx said.
BY THE NUMBERS: CNH Industrial Capital benefited from higher yields in North America, which were partially offset by decreased yields in South America and decreased used-equipment sales, according to its Nov. 7 earnings statement.
The lender reported the following in Q3:
- Originations were $2.8 billion, down 6.6% year over year;
- Managed portfolio grew 8.2% YoY to $29 billion;
- Net income fell 9.3% YoY to $78 million;
- Delinquencies more than 30 days past due dropped 30 basis points quarter over quarter but rose 60 basis points YoY to 2.2%; and
- Its portfolio mix was 67% retail and 33% wholesale, compared with 65% and 35%, respectively, in Q2.
CNH Industrial Capital increased its daily risk provisions in case loan defaults rise, Oddone Incisa, chief financial officer and president of financial services at CNH Industrial, said during the earnings call.
Sales figures included:
- Global industrial sales totaled $4 billion, down 25% YoY;
- Global agriculture sales were $3.3 billion, down 24.5% YoY; and
- Global construction sales fell 27.5% YoY to $687 million.
MARKET REACTION: Shares of CNH Industrial N.V. (NYSE: CNH) were down 4.7% from market open to $10.66 as of market close today. The company has a market capitalization of $13.4 billion.
