CNH Harold Boyanovsky
Performance over last plan period (IAS/IFRS) Net revenues ($bn) Trading profit ($mn) Trading margin 4.7% 6.8% 7.0% 8.4% 8.8% 3.3% 2004 2005 2006 2007 2008 2009 Net revenues ($bn) Trading profit range ($mn) Trading margin range 6-10% operating margin range Balocco Plan Targets (Jul 2004) ~14.0 ~16.0 ~17.0 1,250-1,360 1,600-1,730 1,840-1,970 8.9-9.7% 10.0-10.8% 10.8-11.6% Lingotto Plan Targets (Nov 2006) April 21, 2010 Fiat Investor Day 2
CNH performance versus peer group 2005 CAT Industrial Operating result ($mn) AGCO John Deere Return On Industrial Sales (%) Comparison in $US and US GAAP (Caterpillar machinery operations only as reported ) April 21, 2010 Fiat Investor Day 3
CNH performance versus peer group 2009 Industrial Operating result ($mn) AGCO John Deere CAT Return On Industrial Sales (%) Comparison in $US and US GAAP (Caterpillar machinery operations only as reported ) April 21, 2010 Fiat Investor Day 4
Net sales by business Equipment operations 2006 Net Sales: $12.1bn 2008 Net Sales: $17.4bn 2009 Net Sales: $12.8bn $4.5 26% $4.3 35% $2,1 17% $12.9 $7.8 65% 74% $10.7 83% Agricultural Equipment (AG) Construction Equipment (CE) AG business continued to perform relatively well during the crisis, as CE market declined ~50% (IAS/IFRS) April 21, 2010 Fiat Investor Day 5
Casting an eye over past 4 years Key accomplishments to date What we did well... Successful unbundling of brands in both AG & CE Significant improvement in product quality levels Created effective global distribution network Covered significant gaps in product offerings...and not so well Did not achieve cost competitiveness in <100hp tractors Reduce complexity of product offerings April 21, 2010 Fiat Investor Day 6
A global leading player Presence by region AG CE Combines 40+hp tractors Light Heavy NA Top 2 Top 2 Top 5 Top 10 EUR Top 2 Leader Top 20 Top 10 LA Leader Top 2 Top 2 Top 3 RoW Top 3 Top 5 Leading positions in AG, top 5 in CE April 21, 2010 Fiat Investor Day 7
2010-14 plan the 4 pillars Refine and strengthen quality of product portfolio Create efficient CE organization Close few remaining gaps in AG Improve cost positioning of key products in AG Rejuvenate key offerings in CE Deploy & implement modular design systems Improve margin performance Merged, streamlined organization representing both New Holland & Case Continue to build brand focus Optimize industrial system World Class Manufacturing Position business in development areas Group purchasing Maximum utilization of FPT Powertrain Insourcing of key components CIS growth with new Kamaz JV in Russia Leverage strength in India and China Improve BCC sourced parts and production April 21, 2010 Fiat Investor Day 8
AG demand Key drivers Global Commodity Prices (US$ per metric ton) AG commodity pricing forecasted to remain at historical high levels US Net Farm Income forecast to remain above 10-year average European Farm Income to remain flat Latin America & RoW to return to pre-crisis level Source: IHS Global Insight - March 2010 April 21, 2010 Fiat Investor Day 9
Agricultural equipment industry outlook through 2014 * * All classes of combines (substantial growth in Class 7+) Tractors Combines (k Units) Source: CNH, IHS Global Insight CNH Internal Regions Definition April 21, 2010 Fiat Investor Day 10
AG North American market development A structural shift to higher productivity equipment High horsepower tractors 140+ Tractors N.A. & 4WD Off-peaks but at consistently high levels Units 25.000 20.000 15.000 10.000 Combines Crop Production Equipment Off-peaks but at consistently high levels Class 7 and above to grow due to higher productivity market requirements Emphasis on productivity driving Larger equipment Higher precision Units 5.000 0 13.000 12.000 11.000 10.000 9.000 8.000 7.000 6.000 5.000 4.000 2004 2006 2008 2010E 2012E 2014E 140+ 4WD Combines N.A. Class 7+ 2004 2006 2008 2010E 2012E 2014E Class 7+ TIV % class 7+ Source: CNH, IHS Global Insight - CNH Internal Regions Definition April 21, 2010 Fiat Investor Day 11
AG Market development in Europe (US$ per metric ton) K Units European Ag markets to see limited support on biofuel crops in short-term before mid term rebound Dairy and livestock starting to see slight improvement in 2010 on stable commodities Higher demand for feed grains Improved outlook for hay & forage equipment European Union 2020 mandate for 10% biofuel will increase short-term demand for corn and wheat Farm credit conditions expected to improve over the plan April 21, 2010 Fiat Investor Day 12
AG Market development in Latin America Sugar production forecast Strengthened CNH presence Localized production Both AG brands positioned as full liners Growth in high capacity tractors, combines and row crop equipment Product to support government sponsored programs (US$ per metric ton) Soybean price forecast K Units 12.000 10.000 8.000 6.000 4.000 2.000 LAR Combine Industry Class 7+ 0 30% 0 25% 0 20% 0 15% 0 10% 5% 0 % class 7+ - 0% - 2004 2006 2008 2010 2012E 2014E April 21, 2010 Fiat Investor Day 13
Brazil: new state of the art plant in Sorocaba R$1 billion investment AG & CE production facility, including parts 8,000 units per year World Class Manufacturing Laser cutting up to 25mm Robotic welding State of the art paint shop World Class Logistics Largest parts distribution center in Latin America April 21, 2010 Fiat Investor Day 14
AG Market development in RoW CIS (Russia): AG market for large equipment segments to rise with easing of domestic credit market to rebound 25% over the course of the plan K Units Africa Middle East AG markets picking up in 2010 and forecast to return to 2006 levels by 2012-2013 China: increased demand for soy and livestock consumption. Steady demand for small tractors and increasing trend for larger equipment April 21, 2010 Fiat Investor Day 15
CE demand Key drivers Global GDP trends 2008 2009 2010E 2011E 2012E 2013E 2014E World 1.7% -2.1% 3.0% 3.2% 3.7% 3.6% 3.6% North America 0.4% -2.4% 2.9% 2.9% 3.7% 3.2% 2.7% Europe 0.7% -4.1% 1.1% 1.7% 2.1% 2.3% 2.5% CIS 5.2% -7.4% 2.7% 4.0% 3.9% 4.0% 4.0% Asia (ex Japan) 5.8% 4.4% 7.1% 6.4% 6.6% 6.7% 6.7% Latin America 5.1% -0.6% 3.5% 4.7% 4.7% 4.4% 4.3% Gradual return to pre-crisis level Asia to remain strong Latin America to restart growth phase in 2010 CIS growth to return in 2011 April 21, 2010 Fiat Investor Day 16
CE industry outlook through 2014 Heavy Eq. Light Eq. (k Units) Source: CNH, IHS Global Insight - CNH Internal Regions Definition April 21, 2010 Fiat Investor Day 17
CE Market development in North America Global GDP trends 2008 2009 2010E 2011E 2012E 2013E 2014E World 1.7% -2.1% 3.0% 3.2% 3.7% 3.6% 3.6% North America 0.4% -2.4% 2.9% 2.9% 3.7% 3.2% 2.7% Gradual return to more normal level Positive signs from the housing market with early 2010 showing sporadic increase March 2010 housing starts +20% yoy North American GDP growth above the historic threshold for new equipment sales of 2.5% 2010 forecast to reverse recession US Nonresidential Construction Spending $US in billions US Housing Starts In millions of Units Source: IHS Global Insight March 2010, US Census Bureau April 2010 April 21, 2010 Fiat Investor Day 18
CE Market development in Europe Global GDP trends 2008 2009 2010E 2011E 2012E 2013E 2014E World 1.7% -2.1% 3.0% 3.2% 3.7% 3.6% 3.6% Europe 0.7% -4.1% 1.1% 1.7% 2.1% 2.3% 2.5% Soft market expected to continue Construction environment to remain sluggish, but demand to improve in 2011 on fleet and stock maintenance CE market expected down for full year 2010, yet at a more stable rate than 2009 Source: CNH, IHS Global Insight - CNH Internal Regions Definition Heavy Eq. Light Eq. (k Units) April 21, 2010 Fiat Investor Day 19
CE Market development in Latin America GDP forecast Key objectives to 2014 2008 2009 2010E 2011E 2012E 2013E 2014E Brazil 5.1% -0.4% 4.7% 5.4% 5.3% 4.7% 4.5% Argentina 6.8% -0.3% 1.8% 3.4% 4.0% 4.0% 4.0% Strengthen CNH leadership Actively participating in market demand growth Strengthen localization Major infrastructure spending in Brazil US$300600bn through 2015 Hydroelectric mills Railways and high speed trains Ports Refinery and petrochemical complex World Cup and Olympic Games Focus on high-growth countries Chile Colombia Peru Strengthen distribution network April 21, 2010 Fiat Investor Day 20
CE Market development in RoW Global GDP trends 2008 2009 2010E 2011E 2012E 2013E 2014E World 1.7% -2.1% 3.0% 3.2% 3.7% 3.6% 3.6% CIS 5.2% -7.4% 2.7% 4.0% 3.9% 4.0% 4.0% Asia less Japan 5.8% 4.4% 7.1% 6.4% 6.6% 6.7% 6.7% Middle East 5.1% -0.2% 4.0% 5.5% 5.2% 4.8% 4.6% North Africa 5.0% 3.5% 4.3% 4.5% 4.6% 4.5% 4.4% Gradual return to pre-crisis level Asia to remain strong ion international trading commodity Growth in China driven by commodity and infrastructure sectors CIS growth to return strong in 2011 with the improvements in the credit sector Middle East and Africa growth on continued local development and energy sector China 160 140 120 100 80 60 40 20 0 CE Industry (k Units) '06 '07 '08 '09 '10F'11E'12E'13E'14E Africa Middle East Russia China 40 35 30 25 20 15 10 5 - Other Countries Source: CNH, IHS Global Insight - CNH Internal Regions Definition April 21, 2010 Fiat Investor Day 21
AG key product interventions over plan period Productivity Performance Modular design Tractor More power (>600hp) Optimized powertrains Powertrain CVT across range Design yielding substantial simplification and reduction in cost Combines More power up to Class 9+ High efficiency threshing & cleaning Engine More fuel efficient Tier IV SCR on high output engines 55% reduction in cab models Component rationalization Efficient development Crop production Wider and larger Higher speed with advanced control Hay forage Interventions to improve productivity Expansion of product range Threshing Technology Multi-crop capability Improved grain quality Precision Farming Technology Intelligent control Machine & farm info systems CNH displays and controllers adapted to competitive vehicles Powertrain standardization driven by Tier IV April 21, 2010 Fiat Investor Day 22
AG product development plan Tractors Segment 2010 2011 2012 2013 2014 4WD 220+ hp 100-220 hp 55-115 hp 15-55 hp New models Upgrade Repowering 10 6 4 New model PRODUCT ACTIONS Major upgrade Repowering April 21, 2010 Fiat Investor Day 23
AG product development plan Harvesting Segment 2010 2011 2012 2013 2014 Combine Class 7,8,9 Combine Class 4,5,6 Combine Headers Forage Harvester Grape Harvester New models Upgrade Repowering 8 10 3 New model PRODUCT ACTIONS Major upgrade Repowering April 21, 2010 Fiat Investor Day 24
CE product development plan Light equipment + excavators Platforms 2010 2011 2012 2013 2014 Tractor Loader Backhoe Skid Steer Loader Crawler Excavator Wheel Excavator New models 4 Upgrade 2 PRODUCT ACTIONS Repowering 12 New model Major upgrade Repowering April 21, 2010 Fiat Investor Day 25
CE product development plan Heavy equipment Platforms 2010 2011 2012 2013 2014 Wheel Loader Dozer Grader Compactor New models 4 PRODUCT ACTIONS Repowering 11 New model Major upgrade Repowering April 21, 2010 Fiat Investor Day 26
CE re-organization actions 2009 2009 Streamlined CE brand management and merged to single organization CE gross savings ~$15mn $32mn annualized Salaried & contract headcount cut 24% 2011 cost reduction target by nature 4% 26% 2010 2014 2010-2011 Plan completion actions to add $55mn annualized cost reductions Full plan: $87mn of which $40mn is structural Areas of concentration: complete rationalization programs of industrial footprint 48% 22% 2009 revenue basis Industrial direct Industrial support Mfg footprint Other US GAAP, constant, non currency adjusted April 21, 2010 Fiat Investor Day 27
AG & CE business JV and manufacturing locations Russia (Industrial) Naberezhnye Tractors, Combine, CE CNH 50%, Kamaz 50% Russia (Commercial) Moscow Tractors, Combine, CE CNH 51%, Kamaz 49% Turkey Ankara Tractors CNH 37.5% 37.5% Koç, Public float 25% Dealers: 110 CNH Commercial and Manufacturing JV Commercial and Manufacturing JV Commercial JV consolidated with equity method Pakistan* Dera Ghazi Khan Tractors CNH 43.3%, 50.1% Al Ghazi, public float 6.6% Dealers: 60 Uzbekistan Tashkent Tractors, Planters CNH 51%, Others 49% Retail stores: 13 India New Delhi Tractors CNH: 50% L&T Limited: 50% Dealers: 350 India* Pithampur Tractors CNH: 50% L&T Limited: 50% Retail store: 76 Dealers: 51 Japan Sapporo Tractors CNH 50%, Shibamoto 50% Retail stores: 25 China Shanghai Tractors, CNH 60%; 40% SAIC Dealers: 145 Harbing CNH: 100% Tractors 100% CNH April 21, 2010 Fiat Investor Day 28
RoW positioning Russia & CIS States AG New Venture With KAMAZ (k Units) Localized production late 2010 Tractors, combines, equipment Leverage Kamaz distribution Utilize local supplier base Build on existing partnerships Industrial tractor presence via JV in Uzbekistan More than 15 years as of referencefor Turkmenistan government (k Units) CE Build on KAMAZ JV Tractor loader backhoes and other locally made CE equipment April 21, 2010 Fiat Investor Day 29
RoW positioning India & China India largest tractor market Leverage production facilities: +30K capacity 25% production for export Expand into balers, cane and cotton harvesters and rice farming equipment (k Units) k 410 390 370 350 (k units) India Tractors Industry Global sourcing location for drivelines and engines AG and CE axles 330 310 290 CE: L&T joint venture Production of tractor loader backhoes and compactor equipment in newly refurbished plant 270 250 2006 2008 2010E 2012E 2014E China (k units) AG: Large tractors market for low-medium hp JV with SAIC (SNH): tractors 50-130hp Wholly owned subsidiary in Harbin tractors > 140hp Import of higher hp & higher productivity equipment Expand exports (k Units) CE: Market continues positive trend Step-up sales financial support via local banks Grow Case brand positioning through network expansion April 21, 2010 Fiat Investor Day 30
Fiat Group Purchasing - CNH Material Savings 2010-2014 BCC sourcing plan 2010E $4.3bn APV 2014E $6.7bn APV APV from BCC $0.4bn or 9% APV from BCC $1bn or 15% Glass: China $8 mln ongoing 15% saving Machined Castings: China $50 mln by 2011 15% saving Gears and Shafts: India $40 mln by 2011 15% saving Machined parts: Mexico $35 mln by 2012 12% saving Utility platform : Turkey/India $35 mln by 2012 10% saving Additional $300-400 opportunity by 2014 with increase in-sourcing of global components April 21, 2010 Fiat Investor Day 31
Insourcing of key components Examples Corn Head Pickup Head Insourcing of Combine Headers yielding cost reduction of 25% Draper Head Auger Head April 21, 2010 Fiat Investor Day 32
MidRange tractors New platform 55-115hp T4000 - JxC 9000MT - CS T5000 - JxU TD5000 - Jx 1 platform Light 55-75hp Medium 75-105hp Heavy 95-115hp Modular design and components standardization yielding 20% savings Vehicle 10% Drivetrain 8% Engine 2%...plus... new CVT new high capacity hydraulics system new engine & torque output better ergonomy April 21, 2010 Fiat Investor Day 33
CNH Financial Services CNH Capital Managed Portfolio - $17.3bn @ 2009 year-end Present in 17 Countries Originations and Portfolio Retail originations growing in line with current industrial sales forecast NAR $9.5B EUR $4.1B Retail originations $bn 7,8 8.0 6.8 6.3 6.9 7.3 7.7 8.1 2,6 3,1 2,8 2,4 2,9 3,1 3,2 3,4 LAR $2.6B ANZ $1.1B 5,2 4,9 3,9 3,9 4,1 4,2 4,5 4,7 2007 2008 2009 2010E 2011E 2012E 2013E 2014E NA Originations RoW Originations Standalone Partnering Average Managed Portfolio Global Portfolio Distribution: $12.4bn Retail Portfolio or 71% $4.9bn Wholesale Portfolio or 29% Managed Portfolio $bn 18.8 18.2 17.5 16.4 17 17.4 17.8 17.1 5,9 5,5 5,4 5,1 4,9 5,0 5,1 5,3 Key objectives by 2014: April 21, 2010 Fiat Investor Day 34 11,6 12,9 12,1 11,3 12,2 12,4 12,7 12,9 2007 2008 2009 2012E 2011E 2012E 2013E 2014E Retail and Leasing Wholesale
Revenue growth during plan period 2009-2014 AG Europe 30% North America 15% Latin America 65% Rest of World 60% Worldwide 30% -10% 0% 10% 20% 30% 40% 50% 60% 70% CE Europe 180% North America 140% Latin America 15% Rest of World Worldwide 115% 125% 0% 25% 50% 75% 100% 125% 150% 175% 200% Note: 2010-2014 revenues were calculated on 2010 based FX rates to the USD April 21, 2010 Fiat Investor Day 35
Industrial Capex/Depreciation ratio April 21, 2010 Fiat Investor Day 36
2010-2014 Financials targets $USbn (IFRS) 14.1 14.7 15.9 17.0 18.5 19.9 April 21, 2010 Fiat Investor Day 37
2014 plan is our route to double-digit profitability Strong macro and industry fundamentals Demand growth for agricultural commodities Improving outlook for construction in mature markets and strong growth elsewhere Better product positioning Close competitive gaps Leverage strengths in high horsepower AG International opportunities Manufacturing localization for profitable growth Improved cost structure Synergies with Fiat Group in powertrain technologies and purchase aggregation Streamlined product line and modular components April 21, 2010 Fiat Investor Day 38
Appendix April 21, 2010 Fiat Investor Day 39
2010-2014 Financials targets bn (IFRS) 10.1 11.3 12.2 13.1 14.2 15.3 April 21, 2010 Fiat Investor Day 40
2010-2014 Financials targets Equipment operations $USbn (USGAAP) 11.5% 9.4% 10.0% 10.7% 6.1% 7.9% 7.1% 8.6% 9.2% 5.7% 2.9% 12.8 13.4 2.1 2.6 14.7 3.1 15.8 3.5 17.0 4.0 18.4 4.5 10.7 10.8 11.6 12.3 13.0 13.9 2009 2010E 2011E 2012E 2013E 2014E AG revenues CE revenues High-end operating profit margin Low-end operating profit margin April 21, 2010 Fiat Investor Day 41