CNH Industrial (NYSE:CNH) reported fourth-quarter results that management described as encouraging on a year-over-year basis, while repeatedly cautioning investors against extrapolating the improvement into early 2026 given seasonality, a Q4 sales pull-forward, and ongoing dealer inventory reductions.
Fourth-quarter results and full-year backdrop
CNH’s fourth-quarter consolidated revenues were $5.2 billion, up 6% from the prior-year period. Agricultural segment sales increased 5%, with EMEA up 33% and North America down 10%. Construction sales rose 19% on what executives called an “easy comparison” to a low production quarter in 2024.
For the full year, management said 2025 remained challenging for the agricultural industry. Consolidated revenues were down 9% year-over-year, and industrial adjusted EBIT margin was 4.3%, primarily due to higher tariff costs and an unfavorable geographic mix, partly offset by pricing and cost mitigation actions.
Agriculture and construction profitability pressured by tariffs and mix
In Agriculture, fourth-quarter net sales were about $3.6 billion, up 5% year-over-year, driven by favorable pricing and currency translation. Adjusted gross margin was 20%, down slightly from 20.6% in Q4 2024, which management said reflected tariff costs and geographic mix, partially offset by purchasing efficiencies, lower warranty expenses, and a 15% increase in production hours.
Agriculture adjusted EBIT margin was 6.5%, down from 7.2% in the prior-year quarter, as pricing and lower R&D partially offset negative product and regional mix and higher SG&A tied to variable compensation. On a full-year basis, CNH said gross tariff costs reduced Agriculture EBIT margin by 110 basis points, while unfavorable geographic and product mix reduced it by 90 basis points.
Construction fourth-quarter net sales rose 19% to $853 million, led by improved sales in North and South America. However, gross margin fell 340 basis points year-over-year to 11.5% as tariffs weighed on profitability. Management said purchasing and manufacturing efficiencies were more than offset by $35 million of tariff costs, resulting in a Q4 adjusted EBIT margin of 0.6%. For the full year, construction tariff costs had a 225 basis point impact on EBIT margin.
Dealer inventory, cost actions, and dealer network consolidation
CEO Gerrit Marx highlighted progress on cost and operational initiatives outlined at the prior year’s Investor Day. CNH removed $230 million of cost from the agriculture segment in 2025, which he said puts the company on pace toward a $550 million cumulative savings target by 2030. Marx said these savings and additional actions are intended to eventually offset the tariff cost impact incurred.
CNH also reduced Agriculture dealer inventories by another $200 million in Q4, for a full-year reduction of about $800 million. Management said this was modestly below its initial $1 billion target because CNH shipped more company inventory to dealers than expected late in the year amid “green shoots” in Europe. In Q&A, Marx described the $800 million reduction as a “great accomplishment” and said dealer destocking is largely completed over the last two years, with 2026 representing “fine-tuning” by product line and market.
Marx also discussed efforts to consolidate and strengthen the dealer network, noting CNH’s goal to reduce the number of first-level Ag dealer owners by about a third by 2030 while maintaining coverage. He said feedback from dealer partners has been enthusiastic. CNH also cited growing use of an “AI Tech Assist” tool, saying it has more than 1,500 users worldwide and has been used over 500,000 times.
2026 outlook: trough conditions, tariff headwinds, and a weak Q1 setup
CFO Jim Nickolas said CNH expects 2026 to represent the trough of the cycle. The company forecast global industry retail demand at around 80% of mid-cycle, or down around 5% from 2025 levels, citing low commodity prices and limited farmer confidence beyond replacement demand. CNH expects North America to decline the most in large equipment retail demand, while forecasting EMEA demand to be more stable, with tractors slightly up and combines slightly down.
For 2026, CNH guided Agriculture net sales to be flat to down 5% versus 2025, including 2% favorable currency translation and 1.5% to 2% positive pricing. Agriculture EBIT margin is expected to be 4.5% to 5.5%. Nickolas said cost initiatives are expected to improve Ag margins by 50 to 75 basis points, but the tariff headwind is expected to grow from 110 basis points in 2025 to about 210 to 220 basis points in 2026, with an additional drag from regional mix of up to 50 basis points.
Construction net sales and production are expected to be about flat year-over-year, including roughly 1% favorable currency and 2% pricing. Construction EBIT margin is projected at 1% to 2%, which Nickolas said reflects a full-year impact of tariffs that are estimated to have a gross impact of around 500 basis points of margin.
On a consolidated basis, CNH forecast 2026 industrial net sales to be flat to down 4%, industrial adjusted EBIT margin of 2.5% to 3.5%, and adjusted EPS of $0.35 to $0.45 (based on an average share count of about 1.29 billion). Industrial free cash flow is expected between $150 million and $350 million, with CapEx projected at $600 million to $650 million and R&D about flat year-over-year. The effective tax rate is expected to be 24% to 26%.
Management provided additional detail for the first quarter, calling out that Q1 is typically the weakest quarter and that CNH will continue producing at low levels to hit dealer destocking targets. Nickolas said Agriculture sales in Q1 are expected to decline sequentially in the low 30% range, reflecting a pull-forward of about $100 million to $150 million of sales into Q4 that otherwise would have occurred in Q1. He also said the combination of low production, unfavorable mix, and full tariff impact will likely result in “break-even Q1 plus or minus” for Agriculture segment EBIT and company-wide EPS, while Construction EBIT will likely be negative in Q1 due to tariffs.
Capital returns, CapEx plans, and strategic considerations
CNH reiterated its capital allocation priorities of reinvesting in the business, maintaining a healthy balance sheet, and returning cash to shareholders. In Q4, the company repurchased $45 million of stock at an average price of $10.02 per share. For the full year, CNH returned $432 million through $332 million in dividends and $100 million in share repurchases.
On CapEx, Nickolas said the increase in 2026 spending is primarily aimed at enhancing manufacturing facilities while factories are running slowly, in order to be better positioned ahead of a potential upturn in 2027. He added that some spending will also support dealer enhancements and CNH’s strategic sourcing program, including tooling, as well as certain manufacturing footprint moves.
In closing remarks, Marx said CNH has restarted discussions with “several players” about partnering options for the construction business, emphasizing there is “no urgency or pressure for outcome.” He said the company will explore partnership options to regain a stronger footing in a recovering global construction industry and would update investors in future earnings calls when there is news to share.
About CNH Industrial (NYSE:CNH)
CNH Industrial N.V. is a global capital goods company specializing in the design, production and sale of agricultural and construction equipment, commercial vehicles and powertrain solutions. The firm operates through five core brands—Case IH and New Holland for agricultural machinery, Case and New Holland for construction equipment, Iveco for light, medium and heavy commercial vehicles, and FPT Industrial for engines and drivetrain components. Established in 2013 through the combination of Fiat Industrial and CNH Global, the company draws on a rich heritage of innovation dating back to pioneering landmarks in farm and construction machinery from the 19th century.
The company’s product portfolio encompasses tractors, combines, balers, excavators, backhoe loaders, trucks, vans and bespoke engines for marine, automotive and industrial markets.
