Cat Financial reports 7% increase in 2Q revenues

CAT D6T

With total sales and revenues jumping 24 percent during the second quarter on record-breaking profit, Caterpillar‘s retail and wholesale financing division reported a strong quarter for revenues as well.

Cat Financial reported revenues of $723 million – an increase of $47 million, or 7 percent, for the second quarter over the same period a year ago.

However, 2Q profit for the division was $71 million, a decrease of $43 million, or 38 percent, 2Q 2017, Cat Financial reports.

“Despite continued weakness in the Cat Power Finance and Latin America portfolios, we are pleased with the performance of our core asset portfolio and the growth of our business,” says Dave Walton, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc.

“The global Cat Financial team remains focused on executing our strategy to help Caterpillar customers and dealers succeed through financial services solutions.”

The revenue increase, the company says, resulted from a $35 million positive impact from higher average financing rates and a $26 million favorable impact from higher average earning assets. That was partially offset by a $14 million unfavorable impact from lower lending activity with Caterpillar, the company says.

Profit before income taxes was $100 million for the second quarter of 2018, compared with $164 million for the second quarter of 2017.

Cat Financial says the 38-percent decrease in second-quarter profits was primarily due to an $86 million increase in provision for credit losses, partially offset by a $12 million increase in net yield on average earning assets and a $12 million favorable impact from higher average earning assets.

The company says it benefited from a lower U.S. corporate tax rate enacted January 1, 2018, along with changes in the geographic mix of profits.

The provision for income taxes reflects an estimated annual tax rate of 24 percent in the second quarter of 2018, compared with 30 percent in the second quarter of 2017, Cat Financial says.

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During the second quarter of 2018, retail new business volume was $3.56 billion. That’s an increase of $863 million, or 32 percent, from the second quarter of 2017.

The increase, Cat Financial officials say, was primarily driven by higher volume in Asia/Pacific, North America and Europe, and partly offset by a decrease in Caterpillar Power Finance.