Barloworld reports operating performance off to good start
Barloworld says it has had a solid start to financial 2017 with overall operating performance up on the first quarter of 2016.
The group reports that the first-quarter operating performance for its core equipment business is slightly better, while the Russian project pipeline is strong and at its Iberian business order books have shot up.
An increase in mining activity in tandem with higher commodity prices has helped the company. Its order book at the end of January of R1.7bn is well up on the September 2016 book of R1.3bn.
Meanwhile, the group’s joint venture with its Caterpillar dealer counterpart in the Katanga region of the Democratic Republic of the Congo (DRC) generated profit in the quarter well up on the 2016 period.
“Barloworld’s trading update appears fairly upbeat for the first quarter, so on the whole it looks better compared to the year to September,” Mark Hodgson, an analyst at Avior Capital Markets, said on Wednesday. “The outlook for the DRC joint venture looks positive especially for the second half,” he said.
Barloworld deputy CE Dominic Sewela succeeded Clive Thomson as CE at the group’s meeting on Wednesday.
Barloworld’s handling division saw an operating profit in the first quarter compared with a loss in the quarter in 2016. This was driven by a better performance in South African agriculture. As announced in November 2016, Barloworld had signed a deal to dispose of half its handling and agriculture businesses in SA in a joint venture with German group BayWa.
Meanwhile, the company’s automotive division produced a solid overall first-quarter result amid a tough trading environment. Revenue and operating profit were well up on last year. Its car-rental operation was better, while the motor-trading business gained from acquisitions in 2016.
Logistics traded strongly ahead of last year due to acquisitions and new contracts awarded along the supply chain and transport segments.
In line with previous years, group working capital levels had shown some increase in the first quarter, but were expected to decline over the financial year.