Construction Equipment division net sales increased 14% in the full year 2017 compared to 2016, due to higher industry volume in all regions except EMEA, and net price realisation, primarily in NAFTA and LATAM. In the fourth quarter of 2017, net sales increased 36% compared to the fourth quarter of 2016, driven by market growth in all regions.
Full 2017 year CNH Industrial Construction Equipment division operating profit was $21 million compared to $2 million in 2016, with an operating margin of 0.8% (up 0.7 p.p. compared to 2016). The increase was due to higher volume including a positive overhead absorption and net price realisation, partially offset by increases in raw material cost, unfavourable foreign exchange impacts on product components, and increased production costs. In the fourth quarter of 2017, operating profit was $13 million compared to an operating loss of $30 million in the fourth quarter of 2016. Higher industry volume and positive price realization, partially offset by ramp-up costs to accommodate increased production (up more than 50% in the quarter compared to the fourth quarter of 2016), to meet retail sales in the quarter, is said to have led to the improved results. Operating margin increased 6.9 p.p. to 1.7%. The global order book in Construction Equipment remains solid with an increase year-over-year of over 30%.
For 2018, CNH Industrial says that Construction Equipment demand is forecasted to be up 5-10% in LATAM and APAC while remaining relatively flat to up slightly in EMEA and NAFTA.
