CNH Industrial is separating its on-highway and off-highway businesses to create two listed entities.
The announcement is part of the company’s new five-year plan, titled “Transform 2 Win,” which was unveiled to shareholders at its capital markets day in New York City on Sept. 3.
The on-highway company will include CNH Industrial’s commercial vehicles and powertrain segments, while the off-highway company will include its agriculture, construction and specialty segments.
“The bold plan will lead to the creation of two new global leaders in their respective fields,” said Suzanne Heywood, chairperson of CNH Industrial. “The board of directors strongly supports this ambitious strategy and its confidence is underpinned by the rigorous work undertaken to formulate it.”
The CNH Industrial plan is based on specific segment and functional strategies that will be implemented through a combination of value enhancing strategic initiatives, asset optimization efficiencies and talent engagement and development programs.
The decision follows the completion of a deep portfolio review, taking into account, among other things, strategic, investor and synergy considerations.
The review highlighted that the on-highway and off-highway businesses have different regulatory and customer requirements and are impacted differently by the accelerating industry megatrends.
“With our Transform 2 Win strategy we are setting an exciting new direction for our company. By developing ambitious yet achievable targets for each segment and reorganizing our structure to create two global leaders, all of our great businesses will be better able to realize their full potential in terms of financial performance, shareholder and broader stakeholder value generation and sustainability commitments,” said Hubertus Mühlhäuser, chief executive officer of CNH Industrial.
“Our clear assessment of the key megatrends, that are rapidly changing the business landscape, has led us to embrace this challenge and transform the company.”
CNH Industrial off-highway
The off-highway company, which generated $15.6 billion in revenue in 2018, will be predominantly an agriculture company (75 per cent of revenue) supported by the construction business (19 per cent of revenue). As well, specialty vehicles (6 per cent of revenue) will remain within the off-highway company.
Case IH, New Holland Agriculture and Steyr will build on their market positions, further strengthened product line-ups and improved distribution, and accelerated investment in automation and digitalization activities.
Case Construction Equipment, New Holland Construction and Astra heavy duty quarry trucks, will focus on improving profitability, product range simplification and growing share in application specific segments. Defense vehicles and Magirus firefighting will further develop their industry leading offerings for their specialized customer base.
CNH Industrial on-highway
The newly listed ‘On-Highway’ company, which recorded revenue of $13.1 billion last year, will comprise the Iveco, Iveco Bus and Heuliez Bus commercial vehicle brands (69 per cent of revenue), together with the FPT Industrial powertrain business (31 per cent of revenue). FPT Industrial will remain a key supplier to the off-highway business through a long-term supply agreement.
Transform 2 Win
Through the Transform 2 Win plan, CNH Industrial projects net sales will grow at a growth rate of 5 per cent per year. As well, significant growth is planned for annual product development investment for all segments, totaling $13 billion over the course of the plan to 2024.