Cat Financial has reported revenues of US$643 million for 1Q16, a decrease of US$46 million (7%) compared to 1Q15. 1Q16 profit was US$100 million, a decrease of 25% from 1Q15.
The decrease in revenues was primarily caused by a US$23 million unfavourable impact from lower average earning assets and a US$13 million unfavourable impact from lower average financing rates.
Profit before income taxes was US$145 million for 1Q16, compared with US$187 million for 1Q15. The decrease was primarily due to a US$17 million decrease in net yield on average earning assets reflecting geographic mix changes and currency impacts, an US$11 million increase in provision for credit losses and a US$10 million unfavourable impact from lower average earning assets.
The provision for income taxes reflects an estimated annual tax rate of 30% in 1Q16, compared with 28% in 1Q15. The increase in the estimated annual tax rate is primarily due to changes in the geographic mix of profits.
During 1Q16, retail new business volume was US$2.29 billion, a decrease of US$173 million, or 7%, from 1Q15. The decrease was primarily related to lower volume in the mining and marine portfolios.
At the end of 1Q16, past dues were 2.78%, compared with 3.08% at the end of 1Q15. Write-offs, net of recoveries, were US$31 million for 1Q16, compared with US$12 million for 1Q15. The increase in write-offs, net of recoveries, was primarily driven by the Caterpillar Power Finance and North American portfolios.As of 31 March 2016, the allowance for credit losses totalled US$340 million, or 1.21% of net finance receivables, compared with US$392 million, or 1.38% of net finance receivables at 31 March 2015. The allowance for credit losses at year-end 2015 was US$338 million, or 1.22% of net finance receivables.
"Our portfolio has performed well overall despite ongoing weakness in many of the key end markets we serve," said Kent Adams, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc. "The global Cat Financial team is focused on actively managing portfolio health and continuing to serve Caterpillar customers and Cat dealers worldwide through financial services excellence."
Adapted from press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/the-americas/25042016/cat-finance-reports-1q16-results-971/