Caixin Netherlands released its Q2 2024 financial report, stating that due to a decrease in industry demand, its total revenue decreased by 16% in Q2. However, against the backdrop of a market downturn, Caixin Netherlands still worked hard to mitigate the adverse effects by continuing to implement cost saving measures.
1. CNH Business Segment Q2 Performance Overview
According to the financial report, the combined total revenue of Caixin Netherlands' agricultural machinery, engineering machinery, and financial services business in the second quarter was 5.488 billion US dollars, a year-on-year decrease of 16% and a month on month increase of 13.9%. The net profit was 438 million US dollars, a year-on-year decrease of 38% and a month on month increase of about 9%.
The main reason for the month on month decline in revenue disclosed in the financial report is the decrease in industry demand and the reduction in dealer inventory demand, resulting in a decrease in shipment volume. The pricing ability of the product has shown a slightly favorable situation in the field of agricultural machinery, while in the field of construction machinery, it is basically the same as before.
2. Comprehensive and regional market performance of the construction machinery sector
In the second quarter, the global sales of heavy construction machinery equipment in the construction machinery sector decreased by 5% year-on-year, while the sales of light equipment decreased by 4%. The total demand in Europe, the Middle East, and Africa decreased by 15%, while North America remained stable, South America grew by 30%, and the Asia Pacific region decreased by 6%. The net sales of the construction machinery sector decreased by 16% to $890 million this quarter, mainly due to a decrease in global market demand, resulting in a decline in sales in all regions.
3. Annual expected adjustment
The company predicts that global industrial retail sales in the agricultural and construction machinery markets will continue to be weak in the second half of 2024. Caixin Netherlands is continuing its efforts to increase full cycle profit margins through its previously announced cost cutting plan, which focuses on controlling product costs and sales and management expenses (SG&A) to offset the impact of declining industry demand.
Due to low industry sales forecasts, the company has updated its full year forecast for 2024 as follows:
The net sales of the agricultural sector decreased by 15% to 20% year-on-year, including the impact of currency conversion (previously expected to decrease by 11% to 15%);
The adjusted pre tax profit margin of the agricultural sector is 13.0% to 14.0% (previously expected to decrease by 13.5% to 14.5%);
Including the impact of currency conversion, the net sales of construction machinery business decreased by 15% to 20% year-on-year (previously expected to decrease by 7% to 11%);
The adjusted pre tax profit margin for the construction machinery business is between 5.0% and 6.0% (unchanged from previous forecasts);
Free cash flow from industrial activities is between $70 million and $90 million (previously expected to be between $110 million and $130 million);
Adjusted diluted earnings per share range from $1.30 to $1.40 (previously expected to be $1.45 to $1.55).
