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  • First quarter expectations met in spite of weaker than forecast industry results.
  • New agricultural products gain share in Europe.
  • Full-year profit forecast, before restructuring charges, reiterated.
  • Successful debt reduction actions lower Equipment Operations debt-to-capitalization ratio to 26%.

Lake Forest IL (April 24, 2003) CNH Global N.V. (NYSE:CNH) today reported first quarter 2003 results consistent with expectations, better than the first quarter of 2002, and achieved in a much more difficult industry environment. Tight control of costs were key to achieving CNH's target in the face of lower sales of the company's higher-margin construction equipment products.

For the first quarter CNH reported a net loss of $46 million, which includes net restructuring charges of $6 million. This compares to a first quarter 2002 net loss of $49 million including $3 million in restructuring charges and before the cumulative effect of a change in accounting principle. The net loss per share was $.35 for the first quarter of 2003, including net restructuring charges of $.05 per share. Per share results have been retroactively restated to reflect the reverse stock split effected on April 1, 2003.

CNH reported first quarter consolidated revenues of $2.397 billion, compared to $2.389 billion in the same period last year. Adjusted for the favorable impact of foreign exchange rates, revenues declined by 5% due mainly to a decline in construction equipment sales.

"Again this quarter we have delivered a bottom line result consistent with expectations in spite of weaker than expected industry sales," Paolo Monferino, CNH president and chief executive officer, said. "Moreover, we have maintained our Equipment Operations net debt at virtually the same level as of December 31, 2002 even as we have built inventory in anticipation of the spring selling season."

At the beginning of the second quarter, CNH closed a $2 billion debt-for-equity exchange with majority shareholder Fiat. On a March 31, 2003 pro forma basis, the company's Equipment Operations debt-to-capitalization ratio was reduced to 26% by this transaction.

"With the substantial support of the Fiat Group, supplemented by an infusion of new capital last year and our diligent management of working capital, we have cut our Equipment Operations net debt by approximately $4 billion in just over 12 months time," CEO Paolo Monferino stated. "Our strong balance sheet frees us to grow this business and justifies the faith our customers, dealers and suppliers have placed in us."

First quarter sales of agricultural equipment
Revenues from sales of agricultural equipment increased to $1.600 billion for the quarter, compared to $1.552 billion in the first quarter of 2002. Net of favorable currency, revenues declined by 3%.

First quarter 2003 industry unit sales of under-40 horsepower tractors increased in North America, while sales of over-40 horsepower tractors, combines, and hay and forage equipment declined. In Europe, industry sales were essentially unchanged while Latin American sales declined from 2002 levels. Agricultural equipment industry sales in the developing markets of the world improved moderately compared to 2002.

Retail sales of CNH agricultural equipment in the first quarter were up slightly more than the industry overall, as share gains in Europe and in over-40 horsepower tractors in North America offset slight declines elsewhere.

First quarter sales of construction equipment
Revenues from the sale of construction equipment were $677 million compared to $687 million in the first quarter of 2002. Net of currency, revenues declined by 9% in the quarter.

In the Americas, industry unit sales of heavy equipment were weaker than expected, compared to the same period last year, while in Europe the industry was essentially flat. Worldwide industry unit sales of light equipment were also much lower than expected in the quarter, as moderate declines in North America and Europe more than offset gains in Latin America and Asia.

Unit sales of CNH heavy equipment declined moderately in the Americas and Europe but increased in Asia. Sales of CNH light equipment declined more than the industry in the Americas and Europe.

Equipment Operations first quarter financial results
First quarter net sales of equipment were $2.277 billion, compared to $2.239 billion for the same period in 2002. Adjusted for the impact of favorable currency, net sales declined by 4%.

CNH's Equipment Operations gross margin percentage for the quarter declined slightly compared to the same period last year. Pricing, improved margins from new agricultural products, and favorable exchange rates were more than offset by adverse volume and mix changes, higher medical and pension costs, and launch costs for new products.

SG&A expenses were significantly impacted by exchange rates, offset by the company's cost reduction actions primarily in its construction equipment business.

In total, medical and pension costs for active employees and retirees increased by approximately $24 million in the quarter, offset by the company's profit improvement initiatives.

The drop in net interest expenses for the quarter was due mainly to the company's successful debt reduction actions completed in June 2002.

Financial Services first quarter financial results
In the first quarter of 2003, CNH Capital reported net income of $6 million, including $2 million of restructuring costs net of tax, compared to $9 million in the same period last year when CNH Capital benefited from a large ABS transaction. The company's first significant ABS transaction in 2003 is planned for the second quarter.

The total serviced portfolio at the end of the quarter increased by 4% compared to year end 2002 levels and by 2% compared to the end of the first quarter of 2002. The first quarter of 2003 marked the fourth consecutive quarter in which past due and delinquency rates in CNH Capital's core business have declined.

Balance Sheet
During the first quarter of 2003, CNH's Equipment Operations recorded a seasonal increase of $135 million in debt net of cash, cash equivalents and inter-segment notes receivables. This compares to an increase of $383 million in the first quarter of 2002, reflecting improved working capital management.

During the first quarter of 2003, CNH's Financial Services net debt rose by $605 million to $4.170 billion, reflecting the normal build-up of retail receivables in anticipation of ABS transactions expected in the second quarter of 2003.

On a pro forma basis, considering the $2 billion debt-for-equity exchanges closed on April 7 and 8, 2003, Equipment Operations debt net of cash, cash equivalents and inter-segment notes receivables was $1.659 billion at the end of the first quarter. This is equal to 26% of total net capitalization and approximately $4 billion lower than on March 31, 2002.

Industry Outlook
The high degree of political and economic uncertainty in most major markets introduces a significant level of uncertainty into any forecast of industry or company performance in 2003.

In both North and Latin America, CNH expects 2003 industry sales of agricultural tractors and combines to fall slightly below 2002 levels. In Europe, the industry is expected to remain at or near 2002 levels through the balance of 2003. Tractor sales in the developing markets should be flat.

CNH expects industry sales of heavy construction equipment to remain below 2002 levels in the Americas and Western Europe. Industry sales of light equipment in North America and Europe are expected to show larger declines from 2002 levels, with backhoe loader sales showing the greatest drop. Industry sales of light equipment in Latin America and Asia may be up slightly.

CNH Outlook for the Second Quarter
For the second quarter of 2003, CNH expects to report a net result slightly improved from the same period last year, excluding restructuring charges. The product renewal process in the agricultural equipment business is on track, and CNH expects to compensate for any industry decline through the increased share being won by the new products.

However, weaker than anticipated first quarter performance on the construction equipment side of the business has necessitated substantial cuts in second quarter production and wholesale levels in order to keep inventories in line. Accelerated profit improvement actions and aggressive cost control in virtually all aspects of the enterprise should offset the bottom line impact.

Employee medical and pension costs will increase again in the second quarter and, should the Euro remain strong, the company's SG&A and R&D costs will be adversely impacted. Lower interest expenses in the second quarter are expected to offset both factors.

CNH Outlook for 2003
For the full year, CNH expects its agricultural equipment business to contribute to improved operating results as the introduction of new, higher margin products gains momentum. Share gains and higher margins from new products should more than offset the adverse currency impact on costs.

Based on the first quarter results, CNH is aggressively managing its construction equipment business, moving rapidly to cut costs now and restructure the business for sustained profitability. For 2003, CNH expects that the actions now underway should enable the construction equipment business to reduce its operating loss by 50% compared to the prior year.

Employee medical and pension costs are expected to increase by about $90 million in 2003. These increased costs should be offset by profit improvement initiatives of approximately $100 million in total for the year, with significant manufacturing efficiencies and overhead reductions to be realized in the second half of 2003.

Interest expense savings realized through the company's successful debt reduction action at the start of the second quarter will be partially offset by the adverse currency impact on Euro denominated loans, and higher interest costs on some remaining credit lines, resulting in pre-tax savings of approximately $100 million in 2003.

For the full year, CNH expects to record a bottom line improvement of about $100 million, bringing CNH into the black, before restructuring charges, for 2003.

During 2003, CNH will incur approximately $60 million in pre-tax restructuring costs associated with the rationalization of its construction equipment business. Most of the costs will be incurred in Europe where the obligatory process of consultation and discussion with affected parties is now underway. Some portion of these costs may be incurred in the second quarter.

Beginning in late 2003 and possibly extending into 2004, CNH will incur pre-tax restructuring charges of approximately $190 million associated with the closure of its East Moline facility which was announced in July 2000.

Including all other actions planned or underway, and assuming all East Moline charges occur in 2003, restructuring costs for the year are expected to total about $325 million, pre-tax, with a maximum cash impact of approximately $75 million.


CNH management will hold a conference call later today to review its first quarter results. The conference call webcast will begin at approximately 10:00 am U.S. Eastern time. This call can be accessed through the investor information section of the company's web site at and is being carried by CCBN.

CNH is the number one manufacturer of agricultural tractors and combines in the world, the third largest maker of construction equipment, and has one of the industry's largest equipment finance operations. Revenues in 2002 totaled $10 billion. Based in the United States, CNH's network of dealers and distributors operates in over 160 countries. CNH agricultural products are sold under the Case IH, New Holland and Steyr brands. CNH construction equipment is sold under the Case, FiatAllis, Fiat Kobelco, Kobelco, New Holland, and O&K brands.

Forward Looking Statements
This document contains forward-looking statements as contemplated by the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, estimates and projections. Words such as "expects," "anticipates," "should," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ. Such risks and uncertainties include: general economic and capital market conditions, the cyclical nature of its business, foreign currency movements, hedging practices, CNH's and its customers' access to credit, political uncertainty and civil unrest in various areas of the world, pricing, product initiatives and other actions taken by competitors, disruptions in production capacity, excess inventory levels, the effect of changes in laws and regulations (including government subsidies and international trade regulations), technological difficulties, changes in environmental laws, employee and labor relations, weather conditions, energy prices, real estate values, animal diseases, crop pests, harvest yields, government farm programs and consumer confidence, housing starts and construction activity, concerns pertaining to genetically modified organisms, pension and health care costs, fuel and fertilizer costs.

For a list of major factors and other information that could significantly impact expected results, please refer to CNH's Form 20-F for the year ended December 31, 2002, as filed with the Securities and Exchange Commission.