Cat Financial has released its financial results for 2Q16, reporting revenues of US$659 million. This is a decrease of US$24 million, or 4%, compared with 2Q15. 2Q16 profit was US$102 million – a US$2 million, or 2%, decrease from the same period the previous year.
The decrease in revenues was primarily due to a US$15 million unfavourable impact from lower average earning assets.
Profit before income taxes was US$148 million for 2Q16, compared with US$150 million for 2Q15. The decrease was primarily due to a US$11 million unfavourable impact from the sale of returned or repossessed equipment primarily driven by the absence of gains recorded in 2Q15, a US$7 million unfavourable impact from lower average earning assets and an unfavourable impact from other miscellaneous items. These unfavourable impacts were partially offset by a US$11 million decrease in provision for credit losses and a US$11 million decrease in general, operating and administrative expenses.
The provision for income taxes reflects an estimated annual tax rate of 30% in 2Q16, compared with 29% in the second quarter of 2015. The increase in the estimated annual tax rate is primarily due to changes in the geographic mix of profits.During 2Q16, retail new business volume was US$3.06 billion, an increase of US$319 million, or 12%, from 2Q15. The increase was related to higher volume primarily in North America and Europe.At the end of 2Q16, past dues were 2.93%, compared with 2.97% at the end of 2Q15. Write-offs, net of recoveries, were US$33 million for 2Q16, compared with US$38 million for 2Q15.
As of 30 June 2016, the allowance for credit losses totalled US$346 million, or 1.25% of net finance receivables, compared with US$405 million, or 1.42% of net finance receivables at 30 June 2015. The allowance for credit losses at year-end 2015 was US$338 million, or 1.22% of net finance receivables.
"Our focus has remained on maintaining solid portfolio performance during the current period of weakness in some 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 remains dedicated to helping Caterpillar customers and Cat dealers succeed through financial services excellence."
Adapted from press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/the-americas/27072016/cat-financial-2q16-results-6/