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  • CNH records a profit for the quarter.
  • Excluding restructuring charges, CNH profitable for the first half of 2003.
  • Nearly 80 new products launched in the first seven months of 2003 are expected to contribute to improved margins for the balance of the year.
  • Debt-for-equity exchange substantially strengthens the balance sheet.

Lake Forest IL (July 24, 2003) CNH Global N.V. (NYSE:CNH) today reported net income of $36 million, or $.27 per share, for the second quarter of 2003. Consistent with the company's forecast, CNH's second quarter bottom line, excluding restructuring charges of $20 million, net of tax, was $56 million, compared to $45 million for the second quarter of 2002, before restructuring charges of $6 million, net of tax.

For the first half of 2003, CNH reported a net loss of $10 million, or $.08 per share, including restructuring charges of $26 million, net of tax. Excluding restructuring charges, net of tax, in both years, and excluding the cumulative effect of a change in accounting principle in 2002, CNH recorded a profit of $16 million in the first half of 2003, compared to a loss of $1 million for the same period last year.

"We continue to deliver bottom line results consistent with our plan, confirming our goal to bring CNH into the black for 2003, excluding restructuring charges," Paolo Monferino, CNH president and chief executive officer said. "With our improved balance sheet, CNH is ideally positioned for profitability improvements regardless of market conditions. New, higher margin products on the agricultural side of the business will positively contribute to the bottom line this year and in the future."

Second quarter net sales of agricultural equipment
Net sales of agricultural equipment increased to $1.956 billion for the quarter, compared to $1.778 billion in the second quarter of 2002. Net of favorable currency, revenues were essentially unchanged. During the quarter, CNH under-produced agricultural equipment retail demand by 13% and continued its aggressive actions to reduce dealer stocks.

Second quarter 2003 industry unit sales of agricultural equipment in North and Latin America improved significantly compared to the second quarter of 2002. In North America, industry sales improved across all tractor segments with substantial gains in the under 40 horsepower segment, while combine sales were down slightly. In Europe, agricultural equipment industry sales declined slightly across all major product categories.

Retail unit sales of CNH agricultural equipment increased in the quarter, particularly combines, for which sales both in Europe and North America increased year-over-year in spite of the industry decline. For over 40 horsepower tractors, CNH kept pace with the industry in North America and in Western Europe.

Second quarter net sales of construction equipment
Net sales of construction equipment were $798 million compared to $804 million in the second quarter of 2002. Net of currency, net sales declined by 9% in the quarter, as CNH under-produced construction equipment retail demand by 15%.

In North America, industry sales of light equipment increased earlier in the year than expected, mainly due to the renewal of captive rental fleets, while industry unit sales of heavy equipment increased slightly. In Europe, industry sales were down for heavy equipment but up for light equipment. In Latin America, industry unit sales of heavy equipment were down considerably.

Retail unit sales of CNH construction equipment declined slightly in North America, mainly due to continued destocking actions and the company's decision not to match certain competitor pricing actions in the quarter. In Western Europe, unit sales of CNH heavy equipment declined in line with the market.

Equipment Operations second quarter financial results
Second quarter net sales of equipment were $2.754 billion, compared to $2.582 billion for the same period in 2002. Net of favorable currency, sales were slightly lower than in the same period last year.

CNH Equipment Operations' gross margin for the quarter declined slightly. An unfavorable mix, the reduction of production volumes in order to reduce company and dealer inventory, unfavorable economics, and increased medical and pension costs more than offset higher margins on new products, favorable currency, positive pricing on agricultural products, and the contributions from the company's profit improvement initiatives.

In total, medical and pension costs for active employees and retirees increased by approximately $23 million in the quarter. New actions to reduce overhead costs were a partial offset.

Interest expense for the quarter was lower than in the prior year mainly due to the equity offering in June 2002 and the debt exchanges in June 2002 and April 2003.

First half net sales of equipment were $ 5.031 billion, compared to $ 4.821 billion for the same period in 2002.

Financial Services second quarter financial results
In the second quarter of 2003, CNH Capital reported net income of $27 million, compared to net income of $12 million in the same period last year. The significant improvement in the bottom line was due in part to timing differences in the company's ABS transactions between 2003 and 2002, and to the market's favorable reception for the ABS transaction that occurred in the second quarter of 2003.

The total managed portfolio at the end of the quarter increased by 6% compared to December 31, 2002 levels and remained basically unchanged compared to June 30, 2002. The second quarter of 2003 marked the fifth consecutive quarter in which past due and delinquency rates in CNH Capital's core business have declined year-over-year.

Balance Sheet
Following the $2 billion debt-for-equity exchange early in the second quarter of 2003, Equipment Operations net debt, defined as debt net of cash, cash equivalents and inter-segment notes receivable, was 28% of total net capitalization at the end of the second quarter of 2003, compared with 56% at the end of 2002.

On June 30, 2003, Equipment Operations net debt stood at $1.84 billion, compared to $3.83 billion on June 30, 2002 and $3.66 billion on March 31, 2003. The increase in net debt in the quarter, exclusive of the reduction in net debt resulting from the debt exchange, is related primarily to unfavorable currency translation and a seasonal increase in working capital.

On July 15, 2003, CNH announced its intention to issue $1 billion of senior unsecured notes through the company's wholly-owned US subsidiary, Case New Holland Inc.

Agricultural equipment market outlook for 2003
Based on the results of the first six months, CNH believes that 2003 worldwide industry sales of agricultural equipment should be up slightly. In the second half of 2003, CNH expects industry sales of agricultural tractors to remain flat in Europe while sales of combines are expected to decrease slightly. However, the unseasonably hot weather conditions and associated drought across most of Europe could negatively impact industry sales in the second half of the year.

In North America, industry sales of tractors over 40 horsepower should be flat through the balance of the year, while sales in the under 40 horsepower segment should remain above 2002 levels. Industry sales of combines in North America are expected to be slightly up. Industry sales in Latin America are expected to be up across all major product categories now that government support programs have been confirmed for the balance of the year.

Construction equipment market outlook for 2003
For the balance of the year, CNH anticipates that industry sales of heavy construction equipment will remain flat in North America and down in Western Europe. Industry sales of light construction equipment are also expected to be flat in North America. In Latin America, the current political environment and high interest rates continue to limit infrastructure spending, and this should negatively impact industry sales of construction equipment through the balance of the year.

CNH outlook for 2003
For the full year, CNH expects to report continued and significant bottom line improvement driven by share gains in high horsepower agricultural tractors and combines, higher margins from new agricultural products and tight control of costs.

Looking beyond the current year, the company's profit improvement initiatives, new cost reduction actions and margins on new products should create a solid base for earnings growth over the next three years, irrespective of expected market recovery. CNH has extended its planned profit improvement actions for an additional year, and now expects to achieve a further $100 million in savings by the end of 2006. This estimate is not based on any assumption regarding an appreciable increase in industry volumes from 2002 levels. Through the second quarter of 2003, CNH achieved a total of $606 million in profit improvements.

The company's product renewal process is well underway. On the construction equipment side, almost 50 new products were introduced at the Intermat fair in Paris, in May of this year. For the agricultural business, July has seen the launch of several new core products by both the Case IH and New Holland brands, including the Case IH MXU tractor, the Case IH AFX combine, and a new range of New Holland hay tools. As the proportion of higher-margin new products delivered to the dealer network increases, the company's bottom line will benefit through the balance of the year.

As previously announced, CNH is continuing to aggressively manage 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. Continuing profit improvement initiatives and new cost reduction actions totaling approximately $100 million for the year should offset these increased costs.

Interest expense savings realized through the company's successful debt reduction action at the start of the second quarter would be partially offset by higher interest costs resulting from the company's high yield bond offering now underway and by continuing negative translation effects on non-dollar denominated interest expenses.

For the full year, CNH continues to believe that it will record a year-over-year bottom line improvement of about $100 million, before restructuring charges, bringing CNH into the black for 2003.

During 2003, CNH will incur approximately $60 million in pre-tax restructuring costs associated with the restructuring 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. The total costs already incurred during the first half amount to roughly $20 million.

Depending on the timing of the closure of the company's East Moline, Illinois facility, during 2003, CNH may incur pre-tax restructuring charges of up to $325 million, with a maximum 2003 cash impact of approximately $75 million.


CNH management will hold a conference call later today to review its second 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.

The information contained in this document is as of July 24, 2003. CNH assumes no obligation to update any forward-looking statement contained in this document.

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.