CNH: 70 per cent of its machinery goes to the Japanese firm Kobelco
The investment is worth 700 million dollars, with a focus on the agricultural sector
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CNH Industrial is selling 70 per cent of its Construction Machinery division to the Japanese firm Kobelco (a subsidiary of Kobe Steel): the deal follows the spin-off and subsequent separate listing of Iveco (which comprised CNH’s activities in the lorry, bus and engine sectors) in 2022 and confirms the group’s strategic direction, aimed at focusing exclusively on the agricultural sector. Given the division’s valuation of one billion dollars, CNH will receive 700 million in cash from the transaction.
The group, controlled by Exor, also announced yesterday that it had closed the third quarter with profits down 48 per cent to $35 million, mainly due to one-off charges, and revenue down 1 per cent to 4.354 billion. However, the full-year guidance has been revised upwards, partly thanks to the benefits of refunds relating to tariffs already paid: the group expects adjusted earnings per share of between $0.44 and $0.48 (the previous estimate was between $0.41 and $0.46).
“The combination of our third-quarter results and the agreement with Kobelco reflects clear progress in the implementation of our strategy,” said Gerrit Marx, CEO of CNH, yesterday, adding that “the stronger figures, focus on the supply chain and operational efficiency reflect disciplined execution in a challenging market environment, strengthening our core business whilst pursuing our long-term value creation targets for 2030.”
“Although conditions in the EMEA region and Brazil remain volatile,” added Marx, “the improvement in cyclical indicators in North America reinforces our confidence in the path we are taking.” The CEO explained that the agreement with Kobelco follows “a process aimed at strengthening the group’s business” in the construction sector and at “focusing our attention more closely on the agricultural business”. Marx emphasised that this strategic move “positions CNH as the largest OEM specialising exclusively in agricultural machinery, with the capacity to invest both organically and inorganically as the agricultural sector moves towards recovery”. Furthermore, in the manager’s view, the deal with the Japanese firm will have “a positive impact on margins”, as well as “strengthening the group’s financial profile”.
Specifically, under the terms of the announced agreement (with the deal expected to be finalised by the end of the year), Kobelco will become the majority shareholder in a joint venture into which CNH’s construction machinery business will be transferred, with CNH retaining a 30 per cent stake. Humayun Chishti, currently head of CNH’s construction segment, is expected to continue leading the business as CEO of the joint venture, against a backdrop in which the global construction machinery market has seen rapid international expansion by Chinese manufacturers such as Sany, XCMG, Zoomlion and LiuGong, particularly in the excavator, earthmoving and low-cost machinery segments. This scenario has intensified competition for medium-sized global players.
