May 6, 2020 / 1:56 PM / 20 days ago

UPDATE 2-Italy's CNH stalls spin-off as crisis tips it into loss

(Adds details, quotes from analyst call)

By Giulio Piovaccari

MILAN, May 6 (Reuters) - Italy’s CNH Industrial reported a first quarter net loss on Wednesday due to the coronavirus crisis, which it said would have an continuing impact and meant it needed extra time to list its truck, bus and engine division.

CNH’s Chairwoman and acting Chief Executive Suzanne Heywood said that “persisting uncertainties in evolving end-market conditions” and further possible supply chain disruptions meant it could not yet give a new outlook.

The manufacturer of farm machinery, Iveco commercial vehicles, construction equipment and powertrains, which is controlled by the Agnelli family’s Exor holding company, withdrew its outlook for 2020 at the end of March.

Shares in Milan-listed CNH, which had been rising before the first quarter results were released, closed 6.5% lower.

Heywood, who temporarily took charge of CNH in March to replace departing CEO Hubertus Muhlhauser, told analysts that demand would still be weak in the second quarter after the company said the coronavirus pandemic had an impact across all regions where it operates.

CNH reported a quarterly net loss of $54 million, or $0.05 per share, short of a $13 million-net profit forecast in an analyst poll compiled by Reuters. It made a net profit of $264 million, or $0.19 per share, in the same period last year.

In agriculture machinery market, where CNH made around 65% of its operating profit in 2019, Heywood said demand is expected to fall by at least 20%, adding the industry would begin to recover in the second half.

A deadline for splitting CNH in two and listing its truck, bus and engine business, which had initially scheduled to be completed by early 2021, had been extended as a result of the coronavirus crisis, the company said.

“The original timeline for implementation of such a spin-off will be extended because of market conditions.”

Heywood said available liquidity for CNH, which is progressively resuming operations around the world, was $9.9 billion on March 31 and this gave it a “solid cash base ... to navigate this uncertain and challenging environment”.

CNH recorded negative free cash flow from industrial activities of $1.52 billion in the first quarter and its Chief Financial Officer Oddone Incisa told analysts that he expected the cash burn to be in the same range this quarter. (Reporting by Giulio Piovaccari; Editing by Barbara Lewis and Alexander Smith)

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