Caterpillar Financial Services Corporation
4Q 2019 Earnings Release
FOR IMMEDIATE RELEASE
Cat Financial Announces 2019 Year-End Results
Full-Year 2019 vs. Full-Year 2018
Cat Financial reported revenues of $2.97 billion for 2019, an increase of $119 million, or 4%, compared with 2018. Profit was $410 million for 2019, a $105 million, or 34%, increase from 2018.
The increase in revenues was primarily due to a $108 million favorable impact from higher average financing rates and a $21 million favorable impact from higher average earning assets, partially offset by a $35 million unfavorable impact due to the termination of a committed credit facility with Caterpillar.
Profit before income taxes was $628 million for 2019, a $195 million, or 45%, increase from 2018. Most of the increase was due to a $192 million decrease in provision for credit losses, driven by a lower allowance rate compared with 2018. The lower allowance rate was due to write-offs of accounts in 2019 that were reserved for in 2018, primarily in the Caterpillar Power Finance portfolio. In addition, there was a $99 million increase in net yield on average earning assets. These favorable impacts were partially offset by a $73 million increase in general, operating and administrative expenses and the $35 million unfavorable impact mentioned above related to the termination of a committed credit facility with Caterpillar.
The provision for income taxes reflected an annual tax rate of 31% for 2019, compared with 25% for 2018. The increase in the annual tax rate was primarily due to changes in the geographic mix of profits.
During 2019, retail new business volume was $11.89 billion, a decrease of $189 million, or 2%, from 2018. The decrease was primarily driven by lower volume in Asia/Pacific and EAME, partially offset by higher volume in Mining.
At the end of 2019, past dues were 3.14%, compared with 3.55% at the end of 2018. Write-offs, net of recoveries, were $237 million for 2019, an increase from $189 million for 2018, primarily due to Mining, Caterpillar Power Finance and EAME, partially offset by a decrease in Latin America. The increase in Mining was due to a small number of customer balances written off in 2019, while the increases in Caterpillar Power Finance and EAME were concentrated in the marine portfolio and the Middle East, respectively. As of December 31, 2019, the allowance for credit losses totaled $424 million, or 1.50% of finance receivables, compared with $511 million, or 1.80% of finance receivables at December 31, 2018.