CNH Industrial today announced its updated 2024 strategic plan at its Capital Markets Day event in Miami, Florida.
Scott W. Wine, CNH Industrial Chief Executive Officer, introduced the new Company and set forth its strategic priorities, including Customer-Inspired Innovation; Technology Leadership; Brand and Dealer Strength; Operational Excellence; and Sustainability Stewardship.
Other senior members of the leadership team presented on topics including Precision Technology, Agriculture, Construction, Electrification and Alternative Fuels, Sustainability and three-year Financial targets.
“Today, my colleagues and I had the privilege of unveiling the new CNH Industrial and our long-term strategy for enhanced customer inspired growth and improving financial performance. We are confident that the plan we detailed today gives us a strong foundation to advance with purpose and pace,” said Scott W. Wine, Chief Executive Officer, CNH Industrial. “The enhanced capabilities of our focused Agriculture and Construction businesses will leverage our competitive strengths and acquired assets. These are backed by a deeply experienced team, united by common goals, which will deliver bold actions across the organization for our stakeholders. Guided every step of the way by our customers, our plan will enable CNH Industrial to deliver world-class products with leading technology to the world’s farmers and construction professionals.”
Breaking New Ground – Innovation Sustainability Productivity
Underpinning this updated 2024 strategic plan is the new company purpose: Breaking New Ground, which evokes CNH Industrial’s drive to move first to a place where others follow and continually search for better solutions and breakthrough ideas. The new company purpose is centered on Innovation, Sustainability and Productivity to accelerate CNH Industrial’s ability to help the global farming and construction communities meet the enormous challenge of feeding and sheltering a growing population.
A disciplined financial strategy
Oddone Incisa, Chief Financial Officer, presented the Company’s updated 2024 Financial Plan. Through disciplined investment in the organization, CNH Industrial will continue to deliver organic growth, while pursuing inorganic growth opportunities that build capability and accelerate profitable growth. The latter will be complemented by investments performed by the newly formed CNH Industrial Ventures, which envelops existing partnerships and explores further collaboration with promising digital and technology start-ups operating in the agriculture or construction space. Capex will increase during the plan period to accelerate organic growth, improve customer experiences and prepare for a sustainable future.
CNH Industrial is maintaining its commitment to a strong balance sheet and liquidity and upholding its investment-grade credit rating. The Company confirms its intention to be net- debt free by 2023. Additional financial plan highlights include:
- Gross Margin in excess of 24% by 2024, more than 300bps increase by the end of the plan period
- R&D of ~$2.6 billion, a step up to ~4.5% of Net Sales focusing on new products and new precision technology
The updated 2024 financial plan also commits to a consistent dividend policy and confirms the Company’s ability to exercise appropriate share buybacks.
Precision Technology: Targeting digital leadership
Core to the new CNH Industrial strategy is its focus on technology leadership in automation and its commitment to delivering a fully autonomous farming cycle, while increasingly extending this expertise to enhance the capabilities of the Construction segment.
Parag Garg, Chief Digital Officer, illustrated how the Company is working to enable and enhance farm productivity and yield. By leveraging the great precision technology from the Raven acquisition and championing plug and play automation and autonomy and a full suite of digital services, the Company is increasingly delivering smarter equipment solving customer challenges and making their work easier. CNH Industrial’s strong capabilities are significantly enhanced by Raven Industries, allowing for the swift scaling up of best-in-class solutions to meet evolving customer needs.
Supporting the above efforts are the pillars of the Company’s Precision Technology strategy:
- Customer Obsession, where technology solutions are designed with a heightened awareness of customer needs;
- Tech Culture, a streamlined and trend-adopting approach to work and delivery that optimizes execution;
- Tech Stack, a flexible and robust technological infrastructure that drives this path to automation and autonomy; and,
- A healthy and conducive Partners Ecosystem that fosters open collaboration and removes obstacles.
Agriculture Segment: Industry-leading products (Great Iron) with cutting-edge technology (Great Tech)
Derek Neilson, President Agriculture, discussed the Company’s Agriculture Segment. Present in some 200 countries, it supplies a full range of equipment through tailored brands, products and distribution networks. During the plan period, R&D and Capex investments will almost double to $4bn, focusing on customer-centric innovations in terms of automation and autonomy, connected machine ecosystems and alternative fuels. Agriculture margins are projected to reach 14.5 – 15.5% by 2024.
CNH Industrial will invest in a path to excellence in customer and dealer satisfaction, fundamental to the Company’s future success. The state-of-the-art and productivity-boosting agricultural product portfolio will undergo significant expansion, with 150 product launches expected over the plan period, supporting the differentiated positioning of the Case IH and New Holland Agriculture brands.
Construction Segment: Delivering profitability
Stefano Pampalone, President Construction, demonstrated how the transformation of this business has laid the foundations for future profitable growth. The acquisition of the Sampierana business is a key enabling factor, bringing further in-house technology capabilities and an extended mini and midi excavator product portfolio, including electric models. CNH Industrial’s Construction Segment will offer new customer-facing solutions for enhanced productivity, safety, and sustainability. The segment will continue to pursue a multi- brand strategy via CASE, New Holland Construction (leveraging its agriculture dealer network and applications) and Eurocomach (the newly acquired brand within the Sampierana SpA portfolio).
Further investment in Electrification & Alternative Fuels
With increasing global demand for zero emissions, CNH Industrial will continue to build upon its leading position in alternative propulsion (thanks to 15+ years of R&D and products in commercial production). This will enable its customers to achieve unrivalled results and increased productivity with an enhanced user experience, simultaneously opening new use cases and applications, while also doing good for the planet.
Selin Tur, Vice President of Advanced Technologies and Innovations, presented the Company’s Electrification & Alternative Fuels strategy. It is characterized by a robust product pipeline with innovation synergies foreseen across all product lines for both segments. The Company adds to its existing capabilities with strategic partnerships and extends product platform learnings to its own supply chain operations.
The new CNH Industrial continues on its longstanding path of excellence in sustainability, which is recognized by the foremost authorities. Kelly Manley, Chief Diversity & Inclusion, Sustainability and Transformation Officer, discussed the Company’s Sustainability strategy, which includes:
- Carbon Footprint, a full commitment to science-based target initiatives (SBTi) as a natural continuation of CNH Industrial’s sustained efforts on climate and the environment;
- Circularity & Eco Efficiency, to ensure the sustainable lifecycle of its products together with optimizing water usage and waste management at Company plants;
- Inclusion, Equity and Engagement, where the Company is committed to building equitable human capital, transforming its culture, and engaging meaningfully with the communities in which operates; and,
- Governance and Commitment where CNH Industrial is implementing enhanced metrics to measure its sustainability performance. All of these efforts are focused on securing CNH Industrial’s continued sustainability leadership in its sectors and reinforcing its identity as an employer of choice.
“This plan is a resonant demonstration of the significant transformation that CNH Industrial is undertaking. We are living in a dynamic world and compete in competitive industries, but I am confident in our team and our strategy,” said Suzanne Heywood, Chair of CNH Industrial. “The Board of Directors and I fully endorse the plan presented here today and are supportive of the Senior Leadership Team’s commitment to customer-inspired growth, sustainability and continuously improving the company culture, which will drive results for all stakeholders.”
SOURCE: CNH Industrial