Barloworld produces ‘resilient result’ in year to September

A REBOUND in mining and infrastructure demand has resulted in a significant improvement in the operating performance in the year to September of the Equipment Southern Africa division of Barloworld, one of the largest businesses in the listed distribution group.

Barloworld said yesterday in a trading update that the group produced “a resilient result” for the year to September despite the tough trading conditions, particularly in South Africa.

The group expects headline earnings a share from continuing operations for the year to be between 10 percent and 20 percent higher than the adjusted headline earnings a share from continuing operations for the previous year.

This translates into expected headline earnings a share from continuing operations of between 925 cents and 1 009.1c for the year, compared with 840.9c in the previous year.

Headline earnings a share from continuing and discontinued operations were expected to be between 3 percent and 7 percent higher than the 838.1c in the previous year.

Barloworld said that its joint venture in Katanga province of the Democratic Republic of Congo generated a strongly improved result, driven by improved commodity prices and following the resumption of mining activity by one of its major mining customers.

It said revenue in Equipment Russia improved significantly in dollar terms, driven by improved mining and after sales activity.

The group in September indicated it had entered into preliminary discussions with an interested party for the potential sale of the Equipment Iberia business.

Barloworld said activity in the discontinued Equipment Iberia operations remained at low levels, and it would report an operating loss for the year, mainly because of restructuring costs.

Barloworld said its automotive and logistics division produced pleasing results, despite challenging market conditions, with both revenue and operating profit in the year exceeding the previous year’s levels.

Motor trading

However, the group said revenue in motor trading was negatively impacted by the sale and closure of two BMW dealerships and the closure of three General Motors (GM) dealerships following GM’s exit from South Africa.

Barloworld said trading levels in its logistics business improved from last year because of the full year impact of acquisitions and new contracts secured last year, but the operating performance was well below last year.

It said the loss of a major customer in KLL, the group’s multi-temperature food distribution business, negatively impacted operating profit and further resulted in significant non-operating and capital losses related to the impairment of goodwill and intangibles.

Barloworld expects to publish its annual financial results on November 20.