Happiness is more than a warm sun, it appears
Ithink striving for happiness is a bit like striving to be a better soccer player; practice and fortitude will help, but the truth is that you probably just are what you are.
Take the matter of exercise in general. I have a very unhappy relationship with my Apple Watch, which insists on tracking one day at a time with a boring sequentiality.
It tracks my “rings” each day – the extent to which I satisfy my standing/walking/ exercising goals in a circular graphic form. “Closing a ring” means satisfying one of those goals. Late in the evening, my watch will often say to me, “You can still make it.” Well, yes, I could get out of bed and go for a run; on the other hand, I could smash this watch with a chair. That would also be a satisfying goal.
Happiness study
So where is this all going? I was surprised to see that the Sustainable Development Solutions Network does an annual global study on happiness, the World Happiness Report, and tries to measure global happiness, country
Can the EO-eish label be dropped yet?
Sometimes, there’s a bottom. Sometimes there isn’t. Steinhoff still looks to be a bottomless pit and Nampak is looking more dire by the day. Turnaround stories are tough and shareholders can easily end up in a riches-to-rags situation.
At EOH, it seems as though the worst might be behind it. Goodness knows the fall from grace was a gruesome financial outcome, but those who buy at the right time can still make money from it.
In a trading statement for the six months ended January 2023, EOH reported revenue growth and steady gross margins. It generated an operating profit of between R100-million and R120-million.
The net profit for that period doesn’t reflect the benefit of the improved balance sheet, with a sharp decrease in debt after the end of the period. EOH has now been through the rights offer and seems to have steadied the ship. It might be time for me to stop calling it EO-eish.
As for Stainhoff, though, that name is still well deserved.
Industrial machinery is doing the heavy lifting
Local investors are spoilt for choice when it comes to listed companies supplying the mining industry. Based on recent updates from the likes of Bell Equipment, Master by country. The latest set covers more than a decade up to and including 2022.
The study’s results are interesting and important, both economically and politically.
It polls a representative sample of about 1,000 people in each country with the question: “Overall, how satisfied are you with your life these days?”
Respondents are asked to reply on a
0-10 scale. It then correlates that data with other data sets, like GDP per capita, inequality, perceptions of corruption, the freedom to make life choices, health and longevity, and levels of generosity.
The first surprise is that, overall, levels of global happiness (or sadness, if you want to put it that way) did not decline
(increase) during the
Covid period. Generally, levels of fear over health issues increased during the period, but levels of generosity increased, and that helped to counterbalance the scale.
Drilling and Barloworld, the good times in that space aren’t over yet.
At Master Drilling, revenue for the year ended December increased by 31.7% in US dollars and headline earnings per share increased by 10.1%. The order book and pipeline are both looking strong.
In this space, you need to keep a close eye on the balance sheet. Master Drilling is investing practically all the cash generated from operations into capital expenditure, of which 63% is on expansion and 37% is on sustaining the existing business. Alongside a higher dividend, this has driven an increase in gearing, in other words the group is confident enough to take on more debt.
When it comes to balance sheet management, Barloworld delivered a masterclass over the pandemic. It’s just as well, because Russia’s invasion of Ukraine put the share price under immense pressure, as Russia has been a key market for Barloworld. The company didn’t withdraw from Russia, choosing instead to try to manage the business in a way that works for the local employees.
With the Zeda mobility business no
Scandinavians score best
The report also produces a happiness ranking averaged over three years, and it will surprise nobody that Scandinavian countries make up five of the eight top countries, offering the combination of high living standards, tight communities, moderate inequality, low levels of corruption and great healthcare – I mean, what else can you ask for? I suppose you could ask for more sun; it is kinda weird that countries that are so dark can be so happy.
But what surprised me was the absolute level of happiness in the Scandinavian countries. The winner was Finland, with almost 80% of the adult population expressing satisfaction with their lives.
South Africa’s mid-range score
The results for SA are a bit disappointing because for some longer in the group, Barloworld is focused on the equipment and consumer industries businesses. The former has been growing strongly (excluding Russia) and, although there has been some margin pressure, the Equipment southern Africa segment has been the primary driver of Barloworld’s revenue growth of 14.9% and earnings before interest, taxes, depreciation and amortisation (Ebitda) growth of 11%. Consumer Industries (the Ingrain business acquired from Tongaat) grew revenue by 23.2% but suffered an ugly drop in margins as Ebitda fell
by 12.4%.
A flurry of disposals
In tricky economic conditions when balance sheets are feeling the pressure, management teams tend to have a long, hard look at the asset portfolio. Non-core businesses that don’t make strategic sense need to go.
RCL Foods’ sale of Vector Logistics has been a long time coming, as RCL Foods initiated a strategic review back in 2020. This is South Africa’s leading frozen food logistics operator, servicing not only RCL’s own integrated supply chain but multiple third-party customers as well.
The buyer is an entity that is ultimately part of a Danish investment group, with the reason the survey here was not taken in 2022, but SA sits around 85th out of 109 countries, so I guess you could say we are generally pretty miserable. But the absolute level is around five, which is mid-range. It will be interesting to see if the level decreases further with higher levels of corruption and social issues like load shedding.
I think the most interesting part of the report is the split between the top and bottom half. What this shows, in general, is that, although average global happiness has not changed significantly over the past decade, happy people are getting happier and unhappy people are becoming less happy.
This applies to the globe as a whole, but it differs markedly by region. In Africa, that assertion is particularly true, as it is in North America and Western Europe. But it’s not true for Eastern Europe, where the means of both the bottom 50% and top 50% are improving. The same is true of China.
Overlay that finding on to global politics and economics, and it makes sense. Politics in North America and Europe have become angrier and more bitter. Politics in regions where everyone in society is getting richer, like China and Southeast Asia, and to a lesser extent Eastern Europe, seem more stable.
We may not be a universally happy place, but generally, happiness is holding up. As Oscar Wilde said, some cause happiness wherever they go, some whenever they go. I also like the adage that money can’t buy happiness, but it is often easier to find in a convertible sports car. money coming from an emerging markets infrastructure fund within that group. This is a decent example of foreign investment in our economy, with a purchase price of R1.25-billion.
We also saw PBT Group shareholders rejoicing, with the company selling the Payapps business in Australia and due to receive proceeds that work out to R1.51 per PBT share. Although there has not been a special dividend declaration yet, the company has made it pretty clear that shareholders can look forward to one.
Sticking with Australia, Woolworths is finally rid of David Jones, with that deal now being implemented. Proceeds will be received by the end of June and Woolworths will retain the flagship property in Melbourne, which will be leased to David Jones.
In another example of a failed Australian strategy, we find Murray & Roberts trying to cling to the RUC Cementation business as part of the broader negotiations around the voluntary administration of Clough.
Our track record in Australia really hasn’t been great, which is partly why the market is feeling nervous about Thungela’s expansion Down Under. It will hopefully do a lot better than some of our other local corporates, but mining houses making acquisitions at the top of the cycle have a well-deserved reputation for hurting shareholders.