captives corner
GATX outlook problematic G
ATX Corp, a leader in leasing transportation assets, reported fourth quarter adjusted earnings of 33 cents per share, which missed forecasts and was below the earnings of 35 cents in the year-ago quarter. The decline was due to a lower marine demand and fewer rail lease rollovers. Profit from the Rail segment was $40.7 million in the reported quarter compared with $36.4 million in the year-ago quarter. Lease renewal pricing on cars in GATX’s Lease Price Index (“LPI”) decreased 14 percent compared to a decrease of 18.7 percent in the year-ago quarter. The company shortened the term of lease renewals to 36 months, from 43 months, at the end of the fourth quarter.
Profit for 2010 declined 16.8 percent to $161 million from $193.5 million in 2009. The reduction in profit was driven by the decline in lease income due to fewer cars in the North American fleet, and depressed lease rates on renewals throughout 2010. Lease renewal rates on cars in LPI showed a decline of 15.8 percent compared to a decline of 11 percent in the prior year. As of December 31, 2010, North American fleet totaled approximately 111,000 cars, and fleet utilization rose to 97.4 percent from 95.9 percent in 2009. The European wholly owned tank car fleet totaled approximately 20,000 cars and utilization was 95.7 percent versus 94.7
percent in the last year.
Profit from the Specialty segment inched up to $8.5 million in the reported quarter from $8.1 million in the year-ago quarter. For 2010, the segment profit declined to $48.7 million compared to $51.6 million in 2009 attributable to lower remarketing income and lower earnings from the marine joint ventures.
> RENEWAL RATES ARE LOWER THAN PREVIOUSLY
The Specialty portfolio currently comprises approximately $744.4 million of owned assets (including on and off balance sheet assets) and third-party managed portfolios of approximately $241.9 million. American Steamship Company (“ASC”) segment profit climbed 10 percent year over year to $6.6 million in the fourth quarter and shot up 77.6 percent year over year to $28.6 million in 2010. The increase was mainly driven by greater demand for iron ore shipments.
The outlook for 2011 expects lease pricing to remain challenging. Renewal rates are still lower than the previous levels, and charter marine rates are problematic due to a supply and demand imbalance.
Something in the air in Gulf? O
nly a few short weeks ago firms like HP Financial Services and Leaseplan where announcing plans for major growth in the Middle East region, when the civil unrest in Tunisia and then Egypt started to spread around the region. For example, Leaseplan Emirates, a Joint Venture between Mubadala Development Company PJSC and LeasePlan Corporation N.V., had announced aggressive plans for 2011, starting off with the addition of new units to its fleet to meet what they saw as the rising demand of corporate and government entities. The company planned to sign key new clients in 2011 to continue its fleet growth success over the last few years and to
March 2011 ■
www.leasingworld.co.uk > IN BRIEF
IBM FINANCING PRE-TAX CLIMBS IBM reported that its Global Financing (“IGF”) segment revenues increased 1.2 percent in the fourth quarter to $628 million, from $621 million in the same year ago period. Pre-tax income for the segment increased 14 percent to $567 million, compared to $497 million in the same quarter least year. For the full year, IBM said its Global Financing unit revenues from external and internal sources were $4,080 million, about the same as the $4,076 million in 2009. Full year pre-tax income of $1,959 million was 13.2 percent higher, compared to $1,730 million in 2009. The company said the gross margin for the financing unit was 48.0 percent in 2010, compared to 42.4 percent last year. Receivables, net of allowances, were $26.8 billion at year-end 2010, up from $25.6 billion at the end of the previous year.
continue supporting the needs of companies for their vehicle leasing and fleet management. Similarly, HP Middle East announced extending its services to HP customers with the launch of HP Financial Services in the Dubai International Financial Centre. Eyad Shihabi, Managing Director and Enterprise Business Lead for the Middle East for HP, had said, “With the launch of financial services capabilities we are adding a new, and significant, link in the value chain for our top customers.” Although Dubai and UAE have mercifully avoided the troubles up to now, presumably many business plans will be put on hold, while events unfold in surrounding countries.
PACCAR PROFITS UP PACCAR Financial Services (“PFS”) reports increased profits due to better finance margins and improved portfolio performance. Q4 2010 pretax income was $49.9 million compared to the $35.6 million earned in Q4 2009. Revenues were $243.8 million in Q4 2010 compared to $254.9 million in the same quarter of 2009. For the full year, revenues were $967.8 million compared to $1.01 billion in 2009 and pretax income was $153.5 million in 2010 compared to $84.6 million a year ago. Tim Henebry, PFS president said, “Higher freight volumes and increasing freight rates have improved our customers’ profitability, leading to lower past dues and provisions for credit losses.”
PFS includes PACCAR
Leasing, a major full-service truck leasing company in North America and Europe with a fleet of over 31,000 vehicles.
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