Dear Shareholders,
It is a pleasure to share with you Navistar Financial’s performance throughout 2023, a period marked by our commitment to innovation and sustainable value generation, as well as various challenges. In this regard, we have faced a complex economic environment, characterized by high interest rates and uncertainty in the credit markets. Additionally, the sector has experienced fluctuations in vehicle demand and changes in our clients’ financing preferences.
Internally, we had changes in the Board of Directors and Management, with the purpose of responding to the challenges and interest in the future development of our business, particularly in key areas such as digital innovation, sustainability and continuity. This, within a strong organization, focused on a specialized market and supported by a team of experts.
In this sense, based on best risk practices, having world-class processes, knowing our clients, and supporting their financing needs, delivering timely and high-quality service, we achieved significant financial
and operational goals during the period. This is proof of the company’s ability to adapt to a changing environment and highlights its commitment to innovation and value generation, even in challenging circumstances.
First, our revenues reached record levels, with an increase of 17.8% over the previous year. Additionally, our Profit Before Taxes amounted to P$1,283 million, representing an 86.21% increase compared to pre- pandemic levels (P$680m, 2019). This not only sets a historic milestone for the company, but also, combined with a ROE of 19.54% (vs. 16.12% in 2022) and a 45% reduction in non- performing loans compared to the previous period—which generated a positive effect on the allowance for uncollectable accounts—demonstrates our operational capacity and ability to effectively manage strategic changes.
Furthermore, in response to the company’s consistently strong financial results, it was decided to make the first dividend payment to our shareholders in the company’s 26 years of operation.
This measure not only reflects the company’s important financial position, but also consolidates its reputation as a trustworthy player in the market, generating an environment of confidence and credibility among its investors.
Moreover, a notable improvement in the credit quality of our portfolio has been achieved by strengthening two of the company’s main areas: Credit and Collections. Strengthening the origination process has resulted in a decreased delinquency rate. Additionally, the Collections area experienced one of the best years for recovering
bad debts in Navistar Financial’s history, contributing to the reduction of required reserves and, consequently, leading to double-digit growth in Profit Before Taxes.
Our digital channel for credit application has played a key role in achieving our results and streamlining processes. Along with its intuitive interface, it contributed to more than 40% of credit applications being made through our website, demonstrating the effectiveness of our digital strategies and our ability to adapt to the changing needs of our clients.
In this regard, commibed to maximizing value generation for all our stakeholders, we launched our first services and subscriptions contract. Through this contract, we provide preventive and corrective maintenance services as well as training to our clients. Our approach goes beyond financing transportation equipment, offering our customers access to a variety of maintenance options to ensure the operability and efficiency of their fleets.
In the commercial field, we continued to advance in consolidating our positioning throughout the country, capitalizing on our team’s extensive regional knowledge. With their expertise, we not only segment clients to provide more personalized and effective service, but we have also leveraged the inherent benefits of nearshoring.
In terms of sustainability, we have adopted a critical role as a facilitator, ensuring that our clients have access to the most advanced and environmentally friendly technology through our financing. The launch of the S13 truck, equipped with the last internal
combustion engine (Euro 6) to be manufactured by the brand, is a clear example of this mission. This technology will enable
tus to improve our fuel consumption efficiency, leading to a reduction in CO2 emissions.
Our contribution to a positive impact on the sector is reflected in our strategy to drive the transition to more sustainable mobility, addressing a largely unbanked sector and promoting vehicle renewal across all segments of the transportation sector. In line with this commitment, we offer financial products with preferential terms for these more efficient vehicles (S13). The displacement of these vehicles, in addition to reducing their carbon footprint, will provide greater efficiencies to our clients, as they offer up to 10% beber fuel performance compared to current engines, which translates into a reduction of approximately 1 ton of CO2 for every 10,000 kilometers traveled.
To put this into context, neutralizing one ton of CO2 has an impact equivalent to preserving around 5,000 square meters of forest for a year.
Through our financing plans and innovative strategies, we are providing the necessary tools for our clients to upgrade their fleets with this efficient engine, thereby
reducing their environmental impact and improving their performance on the road. This effort reflects our dedication not only to technological advancement, but also to facilitating the adoption of sustainable solutions.
As a brand, we have developed zero-emission vehicles such as the Electric MV International (eMV®), a 100% electric cargo vehicle produced entirely at the Escobedo plant in Nuevo Leon, and the eCE® International, a 100% electric bus for personnel transportation.
Our experience of over 25 years, combined with solid origination processes, strong portfolio quality and synergies within our group, uniquely position us to lead the transformation towards cleaner and more environmentally friendly mobility.
I am deeply grateful to our collaborators, distributors and business partners for their dedication and effort, which have been fundamental in making 2023 the most successful year in our history so far. To you, our investors, I extend my sincerest thanks for your trust and support.
I am confident that together we can continue the company’s mission and progress towards increasingly sustainable mobility.
Sincerely,
BERNARDO VALENZUELA CADENA
CEO and Chairman of the Board of Directors of Navistar Financial S.A de C.V. SOFOM, E.R