adams kent

Kent Adams, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc. (pictured above) explained that the increase in revenues was primarily due to a $37 million favorable impact from higher average earning assets.

Profit before income taxes was $197 million for the third quarter of 2014, compared with $164 million for the third quarter of 2013. The increase was primarily due to a $23 million improvement on net yield on average earning assets and a $16 million favorable impact from higher average earning assets.

Adams stressed that the provision for income taxes reflects an estimated annual tax rate of 26% in Q3 2014, compared with 27% in the third quarter of 2013. The decrease in rate is primarily due to changes in the geographic mix of pre-tax profits.

During the third quarter of 2014, retail new business volume was $3.13 billion, a decrease of $38 million, or 1%, from Q3 2013. The decrease was primarily related to lower volume in Mining, partially offset by increases in Cat equipment sales in North America.

Adams said: “At the end of the third quarter of 2014, past dues were 2.81%, compared with 2.77% at the end of the second quarter of 2014, 2.47% at the end of 2013 and 2.51% at the end of the third quarter of 2013.

“The increase reflects higher past dues in the Latin American, Asia/Pacific and European portfolios. Write-offs, net of recoveries, were $16 million for the third quarter of 2014, compared with $58 million for the third quarter of 2013.”

“Continued growth and strong yield performance in our earning asset base and the solid performance of our portfolio have resulted in another good quarter for Cat Financial,” said Adams. “We continue to be well-positioned to serve Caterpillar, Cat dealers and our customers worldwide.”

The long view on China

Meanwhile, Caterpillar CEO Doug Oberhelman (pictured below) was speaking recently at a dialogue on Asia-Pacific economic integration and global multilateral trade system during the 2014 APEC CEO Summit in Beijing, China.

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He stressed that despite the moderation of economic growth rate, China still represents a huge market for multinational businesses, in which construction machinery manufacturer Caterpillar intends to continue to invest and embrace opportunities in next 40 years.

The shift from a double-digit growth to a medium-high growth about 7.5% is inevitable, and no economy can grow at a double-digit rate for ever, so this is very normal, Oberhelman said in an exclusive interview with Xinhua.

China's GDP expanded 7.3% from a year ago in the third quarter, compared with 7.5% in the second quarter. The growth in the July-September period marked the slowest quarterly expansion since the first quarter of 2009, but was largely in line with market expectations.

"The Chinese economy is expected to go through a slower but more sustainable growth as well as cycles that we have seen in the United States and Europe. This is a very normal trajectory for our business, one that we are used to dealing with," said Oberhelman, who is also chairman of the company.

He said that the economy is shifting to a consumer-driven one and there is a lot China can grow to get there.

"Today China is the largest equipment market in the world. I don't think that is the case in 1975. We have seen tremendous market expansion opportunities," said Oberhelman, whose company, the world's leading maker of construction and mining equipment, completed the first sale of 38 pipe layers to Chinese market and set up a sales office in Beijing in the mid-1970s.

He added: "The sustained rise of China's economy is a marvel. It is an inspiring example of how strong leadership dedicated to progress can transform a nation and lift millions out of poverty.”

"Caterpillar welcomes, and will continue to support China's efforts to further transform its growth model and comprehensively deepen reforms," said Oberhelman, saying both countries and companies need continuous reforms to generate growth momentum.

He said the company has benefited from the increasing market opportunities created by economic reforms over the past decades in China, where it has built a cross-country footprint with about 16,000 employees, nearly 30 manufacturing facilities, four R&D centers, and three logistics and parts centers.

"We are here not for the next year or 10 years. We are here for the next 40 years," he stressed, adding that "China takes a long view, and companies should take a long view too."

He said the slower Chinese growth rate would not mean shrinking of the company's assets based in China at all - probably a slower rate of expansion.

China has just pledged to contribute US$40 billion to set up a Silk Road Fund to strengthen connectivity and improve cooperation in the country's neighborhood.

"We are always interested in infrastructure programs," said Oberhelman, adding that typically countries that have invested in infrastructure over years will become more competitive and the Silk Road initiative is exactly one example which can help connect a tremendous number of countries and people.

He added: “The fast growth of Asia-Pacific economy cannot be achieved without cooperation among APEC member economies, and further economic collaboration is expected to happen in coming years.”