It's official. CNH's industrial plan provides for the division of the group into two independent companies. The confirmation of the rumors triggered the share from -0,4% to +1,3%. Then the collapse: a few minutes later the shares again took the downward path and at 13.20 pm they dropped 2,2% after having touched a minimum of -3,4%. Run instead fca, among the best stocks of the Ftse Mib with an increase of 1,4%.
The news of the rest, marks a revolution not just. The 2020-2024 business plan provides for the creation of two separate companies, both listed in both Milan and New York. The first will include "on-highway" (road) activities, the second "off-highway", non-road activities. But that's not the only news arriving at CNH. Investments of 13 billion dollars and an average increase in revenues of 5% per year are expected over the next four years.
“This bold plan will create two new global leaders in their respective fields,” he said Suzanne Heywood, president of CNH Industrial. “The board of directors strongly supports this ambitious strategy and our confidence is solidly based in the rigorous work that has gone into its formulation,' added Heywood, speaking of the plans to split into two companies from 2021,
“With the 'Transform 2 win' strategy we are taking a new and exciting direction for our company. Through the development of ambitious yet achievable goals for each segment and the reorganization of our corporate structure to create two global leaders, all of our excellent segments will be better able to express their full potential in terms of financial performance, value generation both for shareholders and, more generally, for all stakeholders and commitment to sustainability", explained the CEO, Hubertus Muehlhaeuse.
Going into details, the “Transform 2 Win” plan, the 'On-highway' company will include the commercial brands Iveco, Iveco Bus and Heuliez Bus (69% of revenues), together with the motor activities of Ftp Industrial (31% of revenues). For the newly listed group (probably in the first quarter of 2021), pro forma 2018 industrial activities revenue is estimated at $13,1 billion.
The 'Off-highway' group, with 2018 pro forma industrial operations revenue of $15,6 billion, will instead production of agricultural machinery (75% of revenues), of the machinery business for construction (19% of revenues) and special vehicles Astra, Difesa and Magirus (6% of revenues).
According to forecasts, the current shareholders will receive one share - with a ratio of 1:1 - of the new company "On-highway". The shareholders' meeting to approve the demerger is scheduled for the second half of 2020.
As for the accounts, the new plan provides for an increase in turnover with a compound annual growth rate of 5%, investments totaling $13 billion over 5 years, Adjusted Ebit margin to 8% by 2022 and 105% by 2024, with Adjusted Ebit more than doubling from current levels. And again: the return on invested capital of the industrial activities is expected at 20% (up 600 basis points compared to 2018) and diluted earnings per share adjusted to grow from $0,86 (average forecast value for 2019) to 2 dollars by 2024. The targets of the plan refer to the current perimeter of CNH Industrial, which will then - again according to the plan - separate into two companies from 2021.
As part of the "Transform 2 Win" strategy, CNH Industrial expects a reduction in operating costs and an increase in the efficiency of all its activities. From an employment point of view, for the moment the company has not mentioned any restructuring plans even if the note speaks of "targeted restructuring actions”. In Italy, the spin-off of the activities of Iveco and Fpt will involve a total of 11.500 employees (6.300 Iveco and 5.200 Fpt).
