By Bianca Flowers and Alessandro Parodi
(Reuters) - Agricultural and construction machinery maker CNH Industrial on Tuesday lowered its 2023 revenue forecast, citing a softening demand for its farm machinery, predominantly in South America, sending its shares plummeting.
The company also announced a restructuring plan that will entail trimming 5% of its salaried workforce costs and reducing its total workforce expenses by 10% to 15%.
Shares were down 7.7% on the NYSE. Trading for the manufacturer was repeatedly halted in Milan due to volatility after the company revised its sales outlook for the year. The stock fell as much as 14%, to its lowest since 2021.
The Italian-American company lowered its net revenue forecast from industrial activities, which accounts for the majority of CNH's revenue, of between 3-6% this year, down from a previous forecast of 8-11%. The manufacturer also changed its free-cash flow estimate to be between $1 and $1.2 billion from $1.3 to 1.5 billion.
U.S. farmer income, a broad measure for farm profitability, is expected to fall by $41.7 billion, a 22.8% decrease from a year ago. CNH's Chief Executive Scott Wine said farmers' balance sheets are still in good shape and attributed the revenue hit to a downturn in agriculture equipment sales in South America.
"It's almost entirely from Brazil -- Brazil has a history of being in a very high inflationary market," he told Reuters, adding that farmers are worried about soft commodity prices and inflated input costs.
Tractor sales in South America fell 16% and combine purchases declined 47% in the three months to Sept. 30.
"We've been wondering when the (farmer) was going to flinch, so this shows it's happening for sure, materially in South America," said Eric Greaser, a vice president at Moody's.
The company will have a single listing in New York starting Jan. 2. It had approved a new share buyback program worth up to $1 billion as part of its plan to "improve liquidity" company executives told shareholders on an earnings call.
CNH, which houses brands such as Case IH and New Holland, reported third-quarter net sales from industrial activities down 1% year on year at $5.33 billion.
The company said it's positioned to maintain full-year adjusted earnings per share target of about $1.70.
CNH reported quarterly adjusted operating profit from industrial activities of $657 million, down from $670 million a year earlier.
(Reporting by Alessandro Parodi, Giancarlo Navach, and Bianca Flowers; Editing by Kirsten Donovan, David Goodman, David Evans and Jonathan Oatis)