Red and blue tractors line up in celebration of the July 4th independence holiday in front of CNH Industrial's plant in Sturtevant, Wisconsin, U.S., June 27, 2024. REUTERS/Timothy Aeppel

By Abhinav Parmar

(Reuters) -Farm and construction machinery maker CNH Industrial lowered its full-year profit forecast on Friday, as it intentionally scaled back production of tractors and combines to avoid a supply glut amid sluggish demand.

Shares of the company were down 7.1% in afternoon trading.

The company, which is famous for its Case IH and New Holland brands of tractors, said it produced fewer units in 2025 than a year earlier, and that, coupled with weaker sales, weighed on its margins.

Farm equipment manufacturers have been forced to scale back production as demand for new machinery remains muted, with lower crop prices and rising production costs prompting farmers to defer big-ticket purchases.

This, in turn, has left dealers grappling with elevated inventories, prompting a more cautious pace of restocking.

"Market fundamentals remain uncertain and challenging for our farmers, and it is difficult to say if we will enter 2026 with more visibility or even more momentum," CEO Garrett Marx said on a post-earnings conference call.

CNH now expects its 2025 adjusted profit to be between 44 cents and 50 cents per share, compared with its previous forecast of 50 cents to 70 cents. Analysts on average expect a full-year profit of 59 cents, according to data complied by LSEG.

"The August 2025 expansion of steel and aluminum tariffs in the U.S. has created additional exposure for CNH," the company said.

"We believe mitigation through global sourcing optimization and pricing actions could offset tariff headwinds over time, though short-term pressures persist," said Nazmi Ghazali, equity analyst at CFRA Research.

CNH reported third-quarter revenue of $4.39 billion, beating analysts' estimates of $3.91 billion.

On an adjusted basis, its profit was 8 cents per share in the quarter ended September 30, below estimates of 13 cents per share.

(Reporting by Abhinav Parmar in Bengaluru; Editing by Maju Samuel)