CNH Industrial (NYSE:CNHI), a U.K.-based global agricultural and construction equipment manufacturer, was the largest contributor for the quarter. Earnings increased by double-digit rates across all divisions in the second quarter, led by agriculture equipment (up 52%) and construction equipment, with strong demand across all regions. Due to the company’s increased second-quarter profitability, combined with the expectations of a lower tax rate, management upgraded earnings guidance, albeit a bit cautiously. Management indicated that the trade wars have not meaningfully affected demand, but the company’s guidance includes an undisclosed buffer in case this occurs. The improved earnings and guidance upgrades are particularly reassuring given the recent management changes and broader macroeconomic concerns. We continue to believe CNH remains attractively priced, adding to our confidence in the upside potential of this investment.
From David Herro (Trades, Portfolio)'s third quarter 2018 Oakmark International Fund commentary.
