Farm and construction equipment manufacturer CNH Industrial recently lowered its 2024 profit forecast for the second time, citing slowing demand for its tractors and combines, which has dampened expectations for a recovery in the latter half of the year.

A steep decline in crop prices, coupled with rising production costs, has reduced farm incomes globally, prompting farmers to reconsider purchasing heavy machinery. This has created a challenging demand environment for agricultural equipment manufacturers.

CNH now anticipates its full-year adjusted profit to range between $1.30 and $1.40 per share, down from its previous forecast of $1.45 to $1.55 per share.

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The Basildon, UK-based company now expects its agriculture segment net sales to decrease by 15% to 20% year-over-year, compared to an earlier projected decline of 11% to 15%.

Oppenheimer analyst Kristen Owen commented: "Our view is that the current down-cycle is likely to extend into 2025 given the current commodities backdrop and the impact on farmer economics globally.”

In the US, farm income is expected to drop approximately 25% to $116 billion, down from $156b in 2023.

Despite the weak demand in the industry, CNH managed to surpass revenue expectations for the quarter, thanks to strong pricing and cost-cutting measures. The company reported a 16% decline in second-quarter revenue to $5.49b, beating analysts' expectations of $5.32b, according to LSEG data.

CNH's shares rose by 2.1% in morning trading. On an adjusted basis, the company posted earnings of $0.38 per share, slightly above analysts' estimates of $0.37.

In a statement, CEO Gerrit Marx, who assumed leadership of CNH on July 1, said: “We will continue to manage the business prudently through 2024 while positioning ourselves for 2025.”