CNH Global N.V. (CNH) prepares to grapple with the currently escalating demands from its Asia Pacific operations by recently announcing to construct a plant worth an initial investment cost of around $90 million at Harbin, in the Heilongjiang Province of northeast China.
This new facility, which is expected to be a gigantic one, would be of around 4.3 million square feet and would expand its agricultural equipment productions by generating high-horsepower tractors and other advanced farming equipment to the Shanghai region.
The current CFO and future CEO of the company, Richard Tobin expressed his alacrity on this venture by explicitly mentioning CNH’s intentions to further proliferate the 100-year old business relationship with China, remaining desirous of further diversifying its existing Chinese market base.
Even though the North American and domestic regions have yielded favorable returns for CNH, revenues earned from the Asia Pacific regions have been disappointing of late. This investment appears to be a wise measure implemented to ameliorate the company’s net sales figures.
CNH recently announced its third quarter financial results for 2011. Revenues were up 30% year over year to around $4.6 billion and Non-GAAP earnings per share came in at $1.16 increasing from 43 cents in the previous year quarter. The company generated cash flows of about $390 million carrying the onus of $218 million for capital expenditures due to a number of new product launches this year.
Established in 1999 and headquartered in Amsterdam, the Netherlands, CNH is a manufacturer of agricultural tractors, combines and construction equipment. It has three broad segments – Agricultural Equipment, Construction Equipment and Financial Services. The company currently has distribution networks in around 170 countries in the world with an employee database of 28,800.
We currently have an Outperform recommendation on CNH Global N.V. The stock currently carries a Zacks #1 Rank, which translates into a short-term rating of Strong Buy.
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