CNH Global N.V.

CNH Reports Improved Third Quarter Net Income

    Lake Forest,  Illinois (ots/PRNewswire) -

      - September Year-To-Date Net Income up 58% to US$156 Million
      - Equipment Operations Profitability Improvement Continues
      - Equipment Markets Remained Generally Strong
      - CNH Capital Continues Strong Performance
      - Reorganization By Global Brands to Accelerate Growth

LAKE FOREST,  Illinois, October 25 /PRNewswire/ --

    CNH Global N.V. (NYSE: CNH) today reported third quarter 2005 net income of US$27 million, compared to third quarter 2004 net income of US$25 million. Results include restructuring charges, net of tax, of US$16 million in the third quarter of 2005, and US$9 million during the same period last year. Third quarter diluted earnings per share of US$.12, were up US$.01 compared with the third quarter of 2004. Before restructuring charges, net of tax, third quarter 2005 diluted earnings per share were US$.19, compared with US$.15, for the third quarter of 2004.

    During the third quarter Harold Boyanovsky was confirmed as the company's President and Chief Executive Officer, a position he had held on an interim basis since February. Subsequently, the company announced its reorganization to global brand businesses, in order to invigorate its Case IH and New Holland agricultural brands and its Case and New Holland construction equipment brands, whose heritages and loyal dealer networks are its most powerful assets.

    "For the past several years and again this quarter we have steadily improved our financial results" said Boyanovsky. "We must strengthen our position and accelerate growth in sales, margins and earnings. Driven by customer expectations for quality, service and responsiveness, global brand businesses are key for our transformation. We expect the achievement of our growth plans will follow."

    Other highlights from the quarter included the following:

@@start.t1@@      -- Compared with last year's third quarter, increased pricing offset
          higher material costs and other cost increases, particularly in
          North America and Western Europe. Steel costs, especially for
          construction equipment, increased more than anticipated, and are
          currently not moderating as expected.
      -- Component shortages have improved since the second quarter but
          shipment delays continued for some products.
      -- During the third quarter, the company launched several new models of
          agricultural tractors and hay & forage equipment, including its first
          products powered by Tier 3-compliant engines. Tier 3 product launches
          will continue through 2006. Construction equipment launches of Tier 3-
          compliant products will begin in the fourth quarter.
      -- In North America, during the quarter, the Case IH ASM planter and the
          New Holland Speedrower (TM) self propelled windrower both received
          "AE50" awards recognizing these products as among the top 50
          innovative new products introduced in 2004, from the American Society
          of Agricultural and Biological Engineers.
      -- During the third quarter, CNH Capital completed its second retail
          asset backed securitization ("ABS") transaction of the year in the
          U.S. totaling US$1.15 billion.@@end@@

    EQUIPMENT OPERATIONS - Third Quarter Financial Results

    Net sales of equipment, comprising the company's agricultural and construction equipment businesses, were US$2.8 billion for the third quarter, essentially the same as in the third quarter of 2004.

@@start.t2@@      Agricultural Equipment Net Sales
      -- Agricultural equipment net sales were US$1.8 billion for the third
          quarter, down 5% from the prior year, and down 7%, excluding
          currency variations.
      -- Excluding currency variations, our sales in North America were up 5%.
          Sales in Europe were down 8%. The sharp industry decline in Latin
          America continued in the third quarter, driving down our sales in the
          region by approximately 62%.
      -- Third quarter 2005 production of tractors and combines was
          approximately 12% lower than retail unit sales in the third quarter,
          approximately the same level of underproduction as in the third
          quarter of 2004.
      Construction Equipment Net Sales
      -- Net sales of construction equipment increased by 9% to US$950 million
          for the third quarter, compared to US$871 million in the third
          quarter of 2004, and were up 7% excluding currency variations.
      -- Excluding currency variations, North American sales were up 12%.
          However, increased sales of backhoe loaders and heavy equipment in
          North America were offset by a decrease in sales for the same
          products in Europe, where sales decreased by 10%. Sales in Latin
          America and Rest-of-World markets were up 27% and 31% respectively.
      -- Production of CNH's major construction equipment products was higher
          than retail unit sales by approximately 5%, slightly less than the
          overproduction in the third quarter of 2004.@@end@@

    Gross Margin

    Equipment Operations gross margin (net sales of equipment less cost of goods sold) for agricultural and construction equipment represented as a percent of net sales, improved by 1.5 percentage points to 15.7% of net sales, or US$434 million, in the third quarter of 2005, compared to 14.2% of net sales, or US$396 million, in the third quarter of last year.

@@start.t3@@      -- Agricultural equipment gross margin improved strongly compared to the
          prior year's third quarter as net price realization and manufacturing
          efficiencies more than offset a continued decline in volumes of
          higher-margin combines in Latin America and Rest-of-World markets.
      -- Construction equipment gross margin improved compared to the prior
          year's third quarter due to net price realization and manufacturing
          efficiencies.
      Industrial Operating Margin
      Equipment Operations industrial operating margin (defined as net sales,
less cost of goods sold, SG&A and R&D costs) expressed as a percent of net
sales improved by 1.3 percentage points to 4.7% of net sales, or US$131
million in the third quarter of 2005, compared to 3.4% of net sales, or US$94
million, in the same period of 2004. The improvement in gross margin dollars,
noted above, accounted for the increase. Increased R&D expenditures,
primarily for new products, were offset by lower SG&A costs, due to lower
than previously anticipated incentive compensation.
      Adjusted EBITDA
      Adjusted EBITDA for Equipment Operations increased by 19% to US$160
million for the quarter, or 5.8% of net sales, compared to US$135 million in
the third quarter of 2004, or 4.8% of net sales. Our interest coverage ratio
for the three months ended on September 30, 2005 was 3.2 times, compared to
2.7 times for the three months ended September 30, 2004.
      FINANCIAL SERVICES - Third Quarter Financial Results
      Financial Services operations third quarter 2005 net income increased by
8% to US$52 million, compared to US$48 million net income earned in the third
quarter of last year. This increase reflects continued improvements in the
Financial Services receivables portfolio quality.
      CNH - Year-to-Date Financial Results
      CNH's net income for the first nine months of 2005 improved by 58% to
US$156 million, compared to US$99 million for the first nine months of 2004.
Results include restructuring charges, net of tax, of US$24 million in the
first nine months of 2005 compared to US$46 million in the same period of
2004. Diluted earnings per share were US$.67, compared to US$.42 in 2004.
Before restructuring, year-to-date diluted earnings per share increased by
24% to US$.77 compared with US$.62 for the same period last year.
      EQUIPMENT OPERATIONS - Year-to-Date Financial Results
      Net sales of equipment, comprising the company's agricultural and
construction equipment businesses were US$9.0 billion for the first nine
months of 2005, compared to US$8.7 billion for the same period in 2004. Net
of currency variations, net sales were at approximately the same level as in
the prior year.
      Adjusted EBITDA for Equipment Operations increased by 8% to US$564
million for 2005, or 6.3% of net sales, compared to US$522 million in 2004,
or 6.0% of net sales. Our interest coverage ratio for the nine months ended
on September 30, 2005 was 3.5 times, compared to 3.0 times for the nine
months ended September 30, 2004.
      FINANCIAL SERVICES - Year-to-Date Financial Results
      Financial Services operations net income improved by 39% to US$145
million for the first nine months of 2005, compared to US$104 million for the
same period last year. This improvement reflects ABS transactions, improved
yields on our wholesale portfolio, higher retail and wholesale ABS volumes,
as well as ongoing improvements in receivables portfolio quality.
      NET DEBT AND OPERATING CASH FLOW
      Equipment Operations net debt (defined as total debt less cash and cash
equivalents, deposits in Fiat affiliates cash management pools and
inter-segment receivables) was US$839 million on September 30, 2005, compared
to US$824 million on June 30, 2005 and US$1.3 billion on September 30, 2004.
In the quarter, US$59 million of net cash was generated by operating
activities. Positive net income plus depreciation and amortization and a
decrease in working capital (defined as accounts and notes receivable,
excluding inter-segment notes receivable, plus inventories less accounts
payable) net of currency variations of approximately US$135 million, all
contributed to cash generation from operating activities in the quarter. The
company's US$120 million contribution to its U.S. defined benefit pension
plan during the quarter was a partial offset.
      At incurred currency rates, working capital on September 30, 2005 was
US$2.3 billion, compared to US$2.7 billion on September 30, 2004.
      In the quarter, CNH became an eligible borrower under Fiat S.p.A.'s 1
billion Euro credit facility agreement. Under the new facility, CNH was
allocated exclusive rights to 300 million Euros of the syndicated credit
line, plus the opportunity to access the remainder of any unutilized
capacity. In addition, Fiat has renewed its US$1 billion credit line revolver
with CNH through January 31, 2007. As of September 30, 2005, CNH had
approximately US$3.9 billion available under US$6.3 billion total lines of
credit and asset-backed facilities.
      During the quarter, the company modified its cash management operations,
to pool the North American cash balances of Equipment Operations and
Financial Services rather than to have each separately pooling with the Fiat
cash management system. The result of this action is a decline in debt with
Fiat Affiliates at Financial Services, a decline in deposits in Fiat
Affiliates cash management pools by Equipment Operations and an increase in
inter-segment funding. These actions, amongst others, are reflected in the
US$836 million reduction in Financial Services debt with Fiat Affiliates in
the quarter, to a debt balance of US$285 million on September 30, 2005. In
the same period, Equipment Operations reduced its deposits in Fiat Affiliates
cash management pools by US$839 million to US$580 million. This reduction in
deposits also funded repayment of US$218 million of Case Corporation bonds
that matured in August and a US$170 million increase in cash and cash
equivalents deposited with third parties.
      Financial Services net debt decreased approximately US$238 million to
US$3.8 billion on September 30, 2005 from US$4.0 billion on June 30, 2005,
primarily reflecting the completion of its US$1.15 billion U.S. retail ABS
transaction during the third quarter 2005.
      AGRICULTURAL EQUIPMENT MARKET OUTLOOK FOR 2005
      CNH continues to believe that for the full year 2005, industry retail
unit sales of agricultural equipment will be at about the same level as last
year, although with regional differences not previously anticipated. CNH
expects worldwide tractor industry unit retail sales will be up slightly with
industry sales of combines down about 19%. Industry sales of under 40
horsepower tractors in North America are now anticipated to be lower than
previously forecast, but industry sales of over 40 horsepower tractors are
expected to be better than last year by 5%-10%. In Western Europe, industry
unit sales of tractors could be down about 6% although combine sales should
be up about 6%. In Latin America, CNH continues to expect that full-year
tractor industry volumes will be about 25% below last year and sales of
combines will be down 60%-65%. Industry sales in Rest-of-World markets now
should be up strongly for tractors and up slightly for combines.
      CONSTRUCTION EQUIPMENT MARKET OUTLOOK FOR 2005
      CNH now expects that full year construction equipment industry retail
unit sales will be stronger than previously anticipated in all regions of the
world, except for North America which remains unchanged from the previous
forecast. Worldwide industry unit sales of light and heavy construction
equipment should be up approximately 10% compared with full year 2004.
Industry sales in North America should be the strongest, up approximately 12%
for light equipment and up about 15% for heavy construction equipment.
      CNH's estimates of major agricultural and construction equipment industry
retail unit sales by major market area are included in the supplemental
information provided at the end of the release.
      CNH OUTLOOK FOR 2005
      CNH expects that its net sales of equipment for the full year 2005 will
increase by up to 5%. Margin improvements at Equipment Operations and higher
profitability at Financial Services and the company's joint ventures are
expected to more than offset the impact of selected investments being done to
better support CNH's dealers, improve product quality, enhance global
sourcing initiatives, and strengthen European logistics operations, thus
leading to an improvement of approximately 35% in Equipment Operations profit
before taxes, minority interest and restructuring costs. The full benefit of
these expected improvements will be partially offset by an increase in our
effective tax rate when compared to 2004. As a result, we anticipate net
income before restructuring, net of tax, compared with the full year of 2004
will improve by approximately 15%.
      In addition, net of tax, restructuring costs for the full year are
expected to be approximately US$65 million. The company expects Equipment
Operations to generate approximately US$250 million of cash flow during the
year, after its third-quarter contribution to its U.S. defined benefit
pension plan of US$120 million. CNH expects to use that cash to further
reduce Equipment Operations net debt, as compared with year-end 2004 levels.
      Based on data through the first nine months of 2005, including our
on-going contributions to plan assets, asset returns less than our
assumptions and the current discount rate environment, CNH expects an
increase in its minimum pension liability of about US$100 million at year end
2005. This would result in a non-cash charge to shareholders' equity of about
US$65 million, net of tax.
      CNH management will hold a conference call later today to review its
third quarter results. The conference call webcast will begin at
approximately 10:00 a.m. U.S. Eastern Time. This call can be accessed through
the investor information section of the company's web site at www.cnh.com and
is being carried by CCBN.
      CNH is the power behind leading agricultural and construction equipment
brands of the Case and New Holland brand families. Supported by more than
11,400 dealers in 160 countries, CNH brings together the knowledge and
heritage of its brands with the strength and resources of its worldwide
commercial, industrial, product support and finance organizations. More
information about CNH and its products can be found on line at www.cnh.com.
      Forward-looking statements. This press release includes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. All statements other than statements of historical fact
contained in this press release, including statements regarding our
competitive strengths, business strategy, future financial position, budgets,
projected costs and plans and objectives of management, are forward-looking
statements. These statements may include terminology such as "may," "will,"
"expect," "should," "intend," "estimate," "anticipate," "believe," "outlook,"
"continue," "remain," "on track," "goal," or similar terminology.
      Our outlook is predominantly based on our interpretation of what we
consider key economic assumptions and involves risks and uncertainties that
could cause actual results to differ. Crop production and commodity prices
are strongly affected by weather and can fluctuate significantly. Housing
starts and other construction activity are sensitive to interest rates and
government spending. Some of the other significant factors for us include
general economic and capital market conditions, the cyclical nature of our
business, customer buying patterns and preferences, foreign currency exchange
rate movements, our hedging practices, our and our customers' access to
credit, actions by rating agencies concerning the ratings on our debt and
asset backed securities and the ratings of Fiat S.p.A., risks related to our
relationship with Fiat S.p.A., political uncertainty and civil unrest or war
in various areas of the world, pricing, product initiatives and other actions
taken by competitors, disruptions in production capacity, excess inventory
levels, the effect of changes in laws and regulations (including government
subsidies and international trade regulations), technological difficulties,
results of our research and development activities, changes in environmental
laws, employee and labor relations, pension and health care costs, the cost
and availability of supplies from our suppliers, raw material costs and
availability, energy prices, real estate values, animal diseases, crop pests,
harvest yields, government farm programs and consumer confidence, housing
starts and construction activity, concerns related to modified organisms and
fuel and fertilizer costs. Additionally, our achievement of the anticipated
benefits of our profit improvement initiatives depends upon, among other
things, industry volumes as well as our ability to effectively rationalize
our operations and to execute our dual brand strategy. Further information
concerning factors that could significantly affect expected results is
included in our Form 20-F for the year ended December 31, 2004.
      We can give no assurance that the expectations reflected in our
forward-looking statements will prove to be correct. Our actual results could
differ materially from those anticipated in these forward-looking statements.
All written and oral forward-looking statements attributable to us are
expressly qualified in their entirety by the factors we disclose that could
cause our actual results to differ materially from our expectations. We
undertake no obligation to update or revise publicly any forward-looking
statements.
      All Figures are in US$
                                                    CNH GLOBAL N.V.
                                  CONSOLIDATED SELECTED FINANCIAL DATA
                                      (Millions, except per share data)
                                                        (Unaudited)
                                                                    September 30,         December 31,
                                                                            2005                      2004
      BALANCE SHEETS
      Total assets                                                 $17,541                 $18,080
      Short-term debt                                              $1,372                  $2,057
      Long-term debt, including current
        maturities                                                    $4,799                  $4,906
      Total liabilities                                         $12,486                 $13,051
      Equity                                                            $5,055                  $5,029
                                                            Three Months Ended    Nine Months Ended
                                                                 September 30,          September 30,
                                                                  2005        2004        2005        2004
      STATEMENTS OF OPERATIONS
      Revenues:
         Net sales                                         $2,768    $2,789    $8,985    $8,714
         Finance and interest income                 194         184         551         464
                 Total revenues                         $2,962    $2,973    $9,536    $9,178
      Net income                                                $27         $25        $156         $99
      Per share data:
         Basic earnings per share                  $0.12      $0.19      $0.79      $0.74
         Diluted earnings per share                $0.12      $0.11      $0.67      $0.42
         Dividends per share                            $  -        $  -      $0.25      $0.25
      STATEMENTS OF CASH FLOWS
      Net cash from operating activities                                    $367        $682
      Net cash from investing activities                                      677        (980)
      Net cash from financing activities                                 (1,038)        203
      Other, net                                                                              23            -
      Increase (decrease) in cash and cash
        equivalents                                                                          29         (95)
      Cash and cash equivalents, beginning
        of period                                                                            931         619
      Cash and cash equivalents, end of
        period                                                                                $960        $524
      Note:
      For a complete set of CNH's condensed consolidated financial statements,
      please go to http://www.cnh.com.
      Web site: http://www.cnh.com@@end@@

ots Originaltext: CNH Global N.V.
Im Internet recherchierbar: http://www.presseportal.ch



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