Why Cnh Industrial swerves
Cnh Industrial announces the temporary closure of some production sites and goes public. But analysts aren't worried. Here are details, numbers and forecasts
CNH Industrial, the Italian-American company of the Exor group that produces commercial vehicles and machinery, lost 0.5 percent (13.99 euros) this morning on the Milan stock exchange after it announced the temporary closure of several production sites in Europe.
PROCUREMENT PROBLEMS
The reason – explained CNH – lies in the problems of the supply chain and the difficulties in finding key components such as semiconductors (or microchips), the shortage of which is damaging many automotive manufacturers.
"VOLATILE CONTEXT"
The context is “highly volatile”, writes the company in a press release, and forces us to “constantly” review production plans. However, according to CNH, the demand is “continuous and strong”.
In the sites subject to temporary closure – for no more than eight working days in October, according to what was communicated – commercial vehicles, agricultural machinery and propulsion systems are built: those dedicated to these productions are twenty-five, out of the total thirty in Europe.
Europe is worth 49 percent of the CNH group's revenues.
WHAT ANALYSTS THINK
The announcement of the temporary closure of some European production sites did not alarm analysts, as Milano Finanza writes. Banca Akros, for example, maintained its buy rating on CNH and stressed that the choice represents a limited measure and a first for the company.
The institute's analysts, then, affirm that the outlet markets for agricultural and construction machinery remain strong: higher sales volumes and higher margins are expected.
Similarly, investment bank Equita believes the interim closure will impact CNH's performance in the short term but will not compromise its overall positive bias given sustained levels of demand.
Probably the segment most affected by the closure will be that of Iveco commercial vehicles – a brand controlled by CNH Industrial 100 per cent -, whose turnover depends on the European market for 80 per cent.
THE EUROPEAN DEMAND FOR COMMERCIAL VEHICLES
At the end of September, ACEA, the association of European car manufacturers, had published the report on sales of new commercial vehicles in the European Union in July and August .
ACEA's numbers for July and August indicated two consecutive declines in commercial vehicle registrations in the European Union area: in July the decline was 11.9 per cent, in August 5.4 per cent. The decrease is linked to the slowdown in demand for vans, which account for 83 percent of total commercial vehicle registrations. The truck and bus segment, however, performed better than last year.
Overall, and despite the negative results of the summer months, in the first eight months of 2021 the demand for new commercial vehicles in the European Union increased by 24 per cent on an annual basis, reaching 1,292,628 units. The growth in demand was double-digit in all four main markets of the Union: +35.4 per cent in Italy; +22.4 in France; + 16 in Spain; +12.5 in Germany.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/cnh-industrial-chiusura-siti-produttivi-europa/ on Thu, 14 Oct 2021 12:39:34 +0000.