CNH Industrial: Farm Equipment Rebound Expected by 2027

CNH Industrial NV foresees a significant rebound in the farm machinery sector by 2027, primarily fueled by the natural aging of existing equipment fleets that will necessitate upgrades for growers. This projection comes even as farmers currently grapple with substantial economic headwinds, including increased fuel and fertilizer costs and reduced yield confidence due to adverse weather conditions. These factors are collectively constraining farmers’ capacity for new capital investments in machinery.

The company’s outlook is underpinned by a surge in equipment purchases between 2022 and 2023, which is expected to create a robust replacement demand in the coming years. This anticipated demand, coupled with a dwindling supply of used equipment, is projected to support the industry. CNH CEO Gerrit Marx indicated on an August 3 earnings call that this replacement cycle is expected to sustain the sector through the next fiscal year.

Following these forecasts, CNH’s stock experienced a notable increase, climbing as much as 17% in intraday trading, marking its largest gain since 2020. The company also revised its annual outlook for 2026 upwards and reported second-quarter profits that surpassed expectations. While CNH’s agricultural sales have seen a marked decrease in North and South America this year, the company has noted growth in light and heavy construction machinery sales in North America and an increase in tractor sales within the Asia Pacific region. Brazil has been identified by Marx as a market with potential for improvement within the current challenging agricultural environment.

In contrast, rival Agco Corp. has recently lowered its own forecast, signaling a less optimistic short-term outlook. Agco has also implemented executive changes, with Damon Audia transitioning from CFO to president of PTx and corporate strategy, and Indira Agarwal stepping in as the new CFO. These personnel shifts follow Agco’s significant $2 billion acquisition of Trimble Inc. assets in 2023, an investment aimed at enhancing its portfolio of internet-connected, efficient farm machinery. Industry leader Deere & Co. is slated to release its earnings report later in August.