CNH Industrial N.V. (CNH) Earnings & Analysis

Latest quarter

CNH reported Q2 FY2026 revenue of $4.8 billion, up from $4.7 billion a year earlier. Revenue beat the consensus by 0.78%, while adjusted earnings per share of $0.13 exceeded the $0.11 consensus. Diluted earnings per share fell to $0.11 from $0.17 a year earlier.

The filing attributes the revenue increase primarily to Construction, where higher North American shipments included machines delayed from the previous quarter. Agriculture sales rose as favorable pricing offset some of the effect of lower volumes. Financial Services revenue declined, with the filing citing lower volumes in the Americas and fewer used-equipment sales after operating leases matured.

CNH’s gross margin fell to 29.3% from 32.2%, and operating margin declined to 13.7% from 17.4%. The filing says tariff costs and lower production volumes affected the cost of goods sold, while Agriculture’s adjusted EBIT also fell because of lower volumes and an unfavorable South American product mix. Free cash flow was −$128.0 million, compared with $520.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Gerrit Marx said dealer inventories were normalizing, equipment fleets were aging and the gap between new and used equipment values had begun to narrow. But commodity prices remained at or below breakeven for many growers, he said, and farmers were cautious about purchases beyond immediate replacement needs. His baseline was for an L-shaped recovery, with agriculture industry retail demand broadly flat in 2027.

CFO James Nickolas said Agriculture’s pricing had more than offset costs during the quarter, although unfavorable product mix and tariffs reduced its adjusted EBIT margin. He said dealer inventories fell in North and South America but rose in EMEA, where retail demand was softer than expected. In response to a question about the region, Nickolas pointed to drought and higher input costs as factors affecting farmer sentiment.

Nickolas said lower tariffs on certain equipment would provide relief, but higher freight costs would offset some of the benefit. He added that Construction had greater exposure to tariffs because of imported finished equipment and its concentration of North American sales. On refund claims, he said CNH would recognize receipts when they arrived and intended to reinvest a portion in projects such as technology or manufacturing upgrades.

Asked about the coming quarters, Nickolas said higher volumes and lower tariffs were the primary factors behind expected improvement from the third to the fourth quarter, followed by pricing and operational changes. He said the planned reduction in dealer inventory would occur largely in the fourth quarter. On Brazil financing risk, he said CNH considered its reserves adequate but would continue monitoring the exposure.

Marx said the company was working on quality, sourcing and factory efficiency, while continuing to invest in connected and AI-enabled equipment. Asked about competition, he said CNH had seen imported tractors in several regions but not yet at significant scale. He also said discussions with potential Construction partners had restarted to explore collaboration models.

Guidance

CNH now expects FY2026 Agriculture net sales to be about flat year over year, versus its previous range of −5.00% to flat. It narrowed its adjusted EBIT margin outlook to 5.00%–5.50% from 4.50%–5.50%.

For Construction, CNH raised its sales outlook to growth of 5.00%–10.0%, from about flat, and its adjusted EBIT margin range to 1.80%–2.30% from 1.00%–2.00%.

The company now expects Industrial net sales to be flat to up 2.00%, versus −4.00% to flat previously, and adjusted EBIT margin of 3.20%–3.80%, versus 2.50%–3.50%. It raised its Industrial free cash flow forecast to $200.0 million–$400.0 million from $150.0 million–$350.0 million.