The construction industry in South Africa has a fairly conservative history when it comes to credit transactions for the procurement of equipment. Certainty, credit arrangements with equipment manufacturers are a fairly new concept and were still treated with caution only a few years ago. One equipment manufacturing company in particular has been determined to compete in the credit market, and its brief but strong history as a financial services provider tells an interesting story.
Back in 2009, Cat Financial was concluding around nine credit transaction agreements a month, either for individual Cat machines or combined fleet orders. Today the average is closer to 50, peaking at 82 in September 2013 and the trend continues upwards in positive territory.
This sustained market projection is supported by first quarter results for the financial year commencing July 2013 when a record number of transactions were concluded. “In just three months, weachieved around 80% of the total revenues recorded for the previous 12 months to June 2013,” says Wayne Morris, head of Cat Financial.
Around 70% of first quarter 2013 business came from the mining sector, either from contract miners or from local and multi-national blue chips. “Overall, market activity shows that credit is increasingly taking preference over cash, which follows the international trend.”
Underwritten by FirstRand Limited entity WesBank, Cat Financial is Barloworld Equipment’s asset financing arm for the full Cat product range, which includes the underground mining sector. (Barloworld Equipment is the Cat dealer for southern Africa.)
Testimony to their success, in October 2013 Cat Financial walked away with the ‘Best Business Unit’ trophy at WesBank Corporate’s prestigious annual Club of Ten Awards.
Adds Morris: “Cat Financial’s unique business model continues to lead the industry thanks to innovative in-house funding mechanisms, OEM support and highly competitive interest rates, whether for pure asset funding or off-balance sheet rentals.”
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