IBM Credit Corp reports that in 1988, net profit from the business rose a storming 52% to $130.5m, representing an 18.5% return on equity against 13.1% in 1987. It says that during the year, it originated financing for $6,300m of equipment, software and services for IBM’s direct customers and distribution channels, an increase of 28% over the 1987. At the end of the year, assets exceeded $7,400m, up 16% on the figure at the end of 1987, primarily as a result of increased financing of products and services and an expanding portfolio of IBM employee mortgage loans. Applying the Statement of Financial Accounting Standards No 96 – SFAS 96 – on accounting for income taxes, and SFAS 91 on accounting for non-refundable fees and costs associated with originating or acquiring loans and initial direct costs of leases, and an adjustment to reflect the decline in expected future residual values of specific leases together led to a net increase in profits for the Credit unit of $33.1m. Down Under, IBM Australia Ltd reported net operating profit for 1998 up a storming 66% to $Aus50m – equivalent to $43.6m – and the improvement was put down to lower company tax rates introduced by the government last year, and increased productivity. Turnover was almost flat, up 1.0% at the equivalent of $1,090m. Paid-up capital increased to $Aus110m after a $Aus30m cash injection from the parent, and the capitalisation of $Aus20m of retained profits.
Across the Channel, IBM France reported pre-tax profits up 3.1% at 2,312F – equivalent to $366m – on turnover up 1.2% at $6,057m, of which $3,192m was business done in France, up 8% on the 1987 figure, and $2,861m was exports, down 5.4% on 1987. The latter figure is mainly the result of sales of large mainframes made in France to other IBMs in the Europe/Middle East/Africa group. The company’s net margin was 6.1%, up from 5.9% in 1987. Comparisons are with restated 1987 figures. This year marks the 75th birthday of the French subsidiary.