Caterpillar (NYSE: CAT) fell short of estimates in announcing fourth-quarter financial numbers on Monday.
Cat Financial reported revenues of $2.85 billion for 2018, an increase of $158 million, or 6%, compared with 2017. Profit was $305 million, a $281 million, or 48%, decrease from 2017.
The increase in revenues was primarily due to a $107-million favorable impact from higher average financing rates and a $94-million favorable impact from higher average earning assets, partially offset by a $48-million unfavorable impact from lower lending activity with Caterpillar.
Profit before income taxes was $433 million for 2018, compared with $590 million for 2017. The decrease was primarily due to a $222 million increase in provision for credit losses, which was driven by a higher allowance rate and an increase in writeoffs, due to continued weakening in the Cat Power Finance portfolio.
This decrease was partially offset by a $42-million favorable impact from higher average earning assets and a $36-million increase in net yield on average earning assets primarily due to changes in portfolio mix.
The provision for income taxes reflects an annual tax rate of 25% for 2018, compared with negative 1% for 2017. The increase in the annual tax rate is primarily due to the overall impact of U.S. tax reform in 2017, along with changes in the geographic mix of profits.
Retail new business volume for 2018 was $12.08 billion, an increase of $853 million, or 8% from 2017.
Shares in Caterpillar went sharply down, $12.51, or 9.1%, early Monday morning to $124.35
