CNH Industrial 2025 Q1 Earnings Misses Targets as Net Income Drops 64%

CNH Industrial (CNH) reported its fiscal 2025 Q1 earnings on May 6th, 2025. The company experienced a significant decline in both revenue and net income, with revenue falling by 20.5% and net income dropping by 64.2% compared to the same quarter last year. These results fell short of expectations. CNH Industrial has also adjusted its guidance downward, anticipating further declines in its Agriculture and Construction segments' sales. The company is committed to navigating these challenges through operational excellence and strategic initiatives.

Revenue

CNH Industrial's total revenue decreased by 20.5% to $3.83 billion in Q1 2025, down from $4.82 billion in Q1 2024. The Industrial Activities segment accounted for $3.20 billion of this total, while Financial Services contributed $651 million. There were eliminations of $25 million, resulting in consolidated revenue of $3.83 billion.

Earnings/Net Income

The company's earnings per share (EPS) fell significantly to $0.10 in Q1 2025 from $0.29 in Q1 2024. Correspondingly, net income declined to $132 million from $369 million in the previous year. The EPS results reflect a challenging quarter for CNH Industrial.

Price Action

The stock price of CNH Industrial edged up 0.32% during the latest trading day, climbed 6.63% during the most recent full trading week, and jumped 9.85% month-to-date.

Post-Earnings Price Action Review

Investors employing a strategy of purchasing CNH Industrial shares after a revenue drop and holding for 30 days experienced a -10.01% return, which underperformed the benchmark by 10.20%. This strategy resulted in a Sharpe ratio of -0.99, indicating a less favorable risk-adjusted return. The maximum drawdown reached -14.40%, highlighting potential volatility, while overall volatility was recorded at 10.99%. The compound annual growth rate (CAGR) stood at -10.87%, emphasizing the challenges faced by this approach in the current market environment. This analysis suggests that investors must carefully evaluate their strategies and risk tolerance when considering investments in CNH Industrial.

CEO Commentary

Gerrit Marx, Chief Executive Officer, emphasized that despite challenging market conditions, CNH Industrial remains committed to operational excellence and advancing innovative technologies. He highlighted the focus on reducing dealer inventories and managing costs to navigate macroeconomic uncertainties. The CEO expressed confidence in the company's strategic initiatives and the dedication of the team to implement them, noting that their balanced global exposure allows them to continue delivering high-quality products and services to customers. Marx is optimistic about discussing their strategy in detail at the upcoming Investor Day.

Guidance

CNH Industrial expects Agriculture segment net sales to decline between 12% and 20% year-over-year, with an adjusted EBIT margin of 7% to 9%. For the Construction segment, sales are projected to decrease by 4% to 15%, with an adjusted EBIT margin of 2% to 4%. Free cash flow from industrial activities is anticipated to be between $100 million and $500 million, while adjusted EPS is guided to be in the range of $0.50 to $0.70.

Additional News

CNH Industrial has announced its 2025 Annual General Meeting (AGM) will be held on May 12, 2025, in Amsterdam, with proceedings available via a live webcast. The Board of Directors has proposed a cash dividend of $0.25 per share, subject to shareholder approval. If approved, the dividend will have a record date of May 21, 2025, and be paid on May 30, 2025. In other news, CNH Industrial forecasts a challenging year with a projected 12%-17% revenue decline in 2025 due to the weak demand in the agriculture and construction equipment markets. The company is focusing on reducing channel inventory by aligning production with retail demand.