To my surprise, I recently discovered that agricultural-equipment ace CNH Global
Net equipment sales soared 29%, with agricultural equipment driven by strength around the globe, and construction equipment supported by Latin America and other emerging markets. Equipment operating margin set a record, and per-share earnings jumped 52%. Before restructuring charges, which were heavier in 2007, EPS was up 42%.
Latin America is worth a few more words. The market for tractors and combines is simply exploding. Industrywide volume for the former was up 31% over last year's second quarter, while combine volume more than doubled. The company is naturally facing some bottlenecks, and it has decided to reopen a Brazilian facility. This excess demand is a pretty nice problem to have, and CNH is fortunate to have the support of Fiat in its efforts to improve global manufacturing efficiencies.
On the construction-equipment side, there's something of a divergence between light and heavy equipment. The light stuff, used in residential and commercial construction, is naturally feeling some housing pain. Not to the degree of a USG
Meanwhile, heavy equipment is linked more to major government infrastructure projects, so emerging-market growth is more than offsetting any Western weakness. This segment is the mirror image of light equipment, with 5%-10% top-line growth expected for the year.
Like larger rival Deere