Quarterly and annual results have started being published by
manufacturers and finance companies worldwide.
One major trend in companies’ announcements is the important
impact that fluctuating currency exchange rates are having on
business, and this is expected to continue in the first quarter of
2009.
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GE Capital Solutions has continued to be hit hard by the
economic turmoil, reporting a remarkable 84 percent decline in
profit in the fourth quarter, while other manufacturers reported
little to no growth at all.
The 84 percent decline has led to a decrease in profits to $92
million (€71 million) at GE Capital Solutions. This leaves the
funder with $119 billion worth of assets on its books, down 3
percent.
“We had a really tough quarter in our corporate lending
business,” said Keith Sherin, vice-chairman and CFO of General
Electric. “This is where we were hardest hit by the turmoil that
we’re seeing in the financial markets.”
Delinquencies in the commercial lending and leasing arm of GE
Capital Finance continue to rise, increasing by 56 basis points in
the fourth quarter to 2.17 percent. GE Capital Solutions drove most
of this increase, accounting for 38 basis points.
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By GlobalDataMeanwhile in the technology sector, IBM Global Financing saw
financing revenue in the fourth quarter increase 3 percent,
although it was hit by a decline in the sale of used equipment.
This meant that real revenues actually decreased by 1 percent
this quarter, to $660 million. The company also noted that revenues
would actually be “up 5 percent, adjusting for currency”.
Year-on-year revenue totalled $2.6 billion, a rise of 2.3
percent.
Results were less rosy at Xerox Financial Services, where
financing activities declined 8.8 percent or $763 million to total
$7.9 billion at year-end. The company attributes $473 million of
losses to “unfavourable currency”.
Xerox FS also sold $246 million of accounts receivables in its
fourth quarter, compared with $146 million in the third quarter of
2008, under accounts receivables sales arrangements in Europe.
While financing businesses in an entirely different sector,
agricultural equipment captive John Deere Financial Services also
saw net income drop by 7.5 percent to reach $337 million in
2008.
According to the company, the decrease was primarily a result of
increased selling, administrative and general expenses, an increase
in average leverage and a higher provision for credit losses.
The volume of finance and operating leases, however, increased
14 and 9 percent, respectively.
