CNH Industrial To Enhance Productivity With Potenza's Buyout

CNH Industrial N.V.’s (NYSE:CNHI) global powertrain brand — FPT Industrial — recently announced the acquisition of Potenza Technology. The buyout will enhance FPT Industrial’s accelerating development of sustainable electric powertrains across a range of operating segments. This acquisition marks another step by FPT Industrial toward electrification, one of the pillars of its multi-power strategy.

CNH Industrial is committed to delivering solutions, which not only reduce emissions and enhance productivity, but also provide futureproof technology for the long term.

The company’s strategic buyouts and divestments of dealerships as well as franchises to expand business bode well. CNH Industrial completed the acquisition of ATI Inc. last year, which will provide access to factory-fit industry-leading track technology to customers of Case IH and New Holland Agriculture. It also acquired K-Line Ag to enhance the crop-production portfolios of Case IH and New Holland Agriculture. The firm sold the Truckline parts business to Bapcor to ensure continuity of service for Australia’s commercial vehicle customers.

Moreover, CNH Industrial’s 2020-2024 business plan ‘Transform 2 Win’ aims at operational efficiency through targeted restructuring efforts in order to enhance profits and streamline business. It expects full implementation of the plan by the end of 2022. As part of its five-year plan, the company plans to spin-off its truck maker Iveco as a separate business to double the profit margin. The strategic spin-off holds the promise of unlocking significant value by maximizing focus, optimizing costs and delivering synergies.

Nonetheless, headwinds surrounding agriculture and construction sectors are likely to take a toll on CNH Industrial in 2020. The company expects decline in its agriculture and construction segments, particularly in the first half of the year. The company expects adjusted earnings per share to decline 40-50% in first-quarter 2020.

Notably, the company has temporarily halted operations at four of its plants in Italy to implement measures to fight the coronavirus outbreak in the country. The affected plants, are located in Brescia, Suzzara, Piacenza and San Mauro Torinese, all in northern Italy. The plants in Brescia and Suzzara are set to reopen on Mar 13, 2020, while the one in Piacenza will resume operations from Mar 19, 2020.

CNH Industrial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

COVID-19 is a concern for other global auto biggies like Groupe PSA, Ford (NYSE:F) , General Motors (NYSE:GM) , Honda Motor (NYSE:HMC) , Nissan and Renault (PA:RENA). All of these companies have manufacturing plants in Wuhan — China’s motor city. As part of the nationwide shutdown, many automakers have closed their factories and their production as well as sales has gone for a toss.

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