Barloworld reports solid H1 earnings

Barloworld, a dealer for Caterpillar and other industrial brands, reported a 14% rise in first-half earnings yesterday as a pick-up in mining activity spurred sales of heavy equipment.

The biggest revenue increase came from its equipment businesses in southern Africa, its biggest market, led by mining machine sales in South Africa, Mozambique and Zambia, it said.

Its equipment business in Russia also continued to benefit from greenfield and brownfield mining projects.

Chief executive Dominic Sewela said: “The improving global economy and current favourable commodity prices have resulted in improved mining output in our region.

“This has increased demand from both mining companies and contract miners for replacement machines and to a lesser extent machines for expansion projects.”

Barloworld’s order book for its Equipment Southern Africa business stood at R2.9 billion at the end of March, in line with its level in September 2017, but up from R1.9 billion a year earlier.

Its car rental and sales business, however, saw first-half revenue fall 5.8% from a year as a result of BMW and General Motors SA dealership closures and disposals during 2017.

Headline earnings per share from continuing operations rose to 457 cents in the six months to March 31, from 400 cents a year earlier, the equipment, car rental and logistics provider said. Operating profit from continuing operations increased 6% to R2 billion.

Barloworld carried out a strategic review of its businesses last year to address underperforming businesses and optimise returns from its existing portfolio. Last month, it said it would sell its underperforming Iberian equipment business to privately owned Italian group Tesa S.p.A.