By Susan Kelly
CHICAGO, April 24 (Reuters) - Two U.S. farm equipment makers painted a gloomy outlook for the beleaguered sector on Thursday even as they reported improved quarterly results.
CNH Global NV , one of the world's largest makers of tractors and combines, lowered its industry outlook for global farm equipment demand, noting a high degree of political and economic uncertainty in most major markets.
The maker of Case IH and New Holland brand equipment said industrywide sales were weaker than expected in the first quarter and predicted 2003 industry sales of tractors and combines would fall slightly below last year's levels in North and Latin America.
In February, the company had forecast North American demand would remain at last year's levels.
The farm equipment sector has suffered through a prolonged slump as large crops and weak export demand reduced commodity prices and hurt farm income.
"It has been just unremitting bad news since 1997. The agricultural cycle is really extended right now," said Mark Koznarek, analyst with independent firm Midwest Research.
Rival equipment maker AGCO Corp. on Thursday said it continues to see flat worldwide demand for agricultural machinery in 2003 but also noted that most major markets weakened in the first quarter.
"North American farm equipment may not turn up this year," Goldman Sachs analyst Joanna Shatney said in a research report on Thursday.
Koznarek said a rebound in the sector, when it does finally come, should be fairly dramatic.
"When things finally do start to recover, there is going to be a pretty ferocious snap back," he said.
CNH, which also makes construction equipment, said 2003 industry sales of heavy equipment are expected to remain below last year's levels, with sales of light equipment showing even larger declines.
MANUFACTURERS TAKE COSTS OUT
Lake Forest, Illinois-based CNH said on Thursday its quarterly loss narrowed from a year ago as it controlled costs and rolled out new products.
The company, formed by the 1999 combination of Case Corp. and New Holland N.V., said it still expects to post a profit in 2003, before restructuring charges, after three years of losses.
Since the merger, the company has focused on integrating the two businesses and reducing debt.
CNH reported a first-quarter net loss of $46 million, compared with a net loss of $49 million a year ago. The loss per share was 35 cents, including restructuring charges of 5 cents per share. Per share results were retroactively restated to reflect a reverse stock split on April 1.
Total net sales rose to $2.28 billion in the quarter from $2.24 billion a year ago.
CNH said it expects restructuring charges to total about $325 million before tax in 2003.
For the second quarter, the company forecast slightly improved income from a year ago excluding charges.
AGCO posted a first-quarter profit, reversing a year-earlier loss, citing higher sales in Europe and South America and the weaker U.S. dollar.
The Duluth, Georgia-based company said it earned $12.5 million, or 17 cents a share, compared with a net loss of $26.2 million, or 36 cents a share, a year ago. Sales rose 22 percent to $757.2 million from $618.6 million.
Agco also said it expects second-quarter net income of 43 cents to 48 cents before restructuring charges of 7 cents to 9 cents a share. It continues to estimate 2003 income of $1.60 to $1.75 a share before restructuring expenses of 13 cents to 17 cents a share.
Shares of CNH fell 22 cents, or 2.5 percent, to $8.46 in New York Stock Exchange trading on Thursday.
AGCO's shares rose 46 cents, or 2.7 percent, to $17.46.