Barloworld saw an improvement in all its businesses in the first five months to February 28 and earnings before interest tax depreciation and amortisation (Ebitda) increased 11% to R1.9 billion in the period.
The heavy industrial equipment, automotive and consumer industries group said in an update yesterday that revenue, at R16.5bn, increased 14.9% compared to the five months ending February 28, 2022.
This and other measures saw an 18% uplift in operating profit from trading activities to R1.5bn. Ebitda and operating profit margins were 11.5% and 8.9% respectively, and in line with the prior period.
The Equipment Southern Africa division delivered strong growth across its revenue segments due to fleet replacements and mining sector activity.
Its revenue grew 41.8% to R10.2bn, with the rise driven in the main by an increase in machine sales of 64.2%, and an increase in parts sales of 30.1%.
Operating profit from core trading activities before foreign exchange gain and losses increased by 35.9% to R878 million.
Operating expenditure was up 18.6% due to trade related expenses and digital transformation costs. Ebitda at R1bn was 25.4% higher.
The Bartrac joint venture contributed a R53m share of profit, a 23% increase. Working capital increased to support growth and manage lead times, but this was expected to unwind in the second half.
The firm order book remained strong at R5.7bn versus R4.7bn at the same time last year.
The Equipment Eurasia division had a strong start to the financial year, supported by better-than-expected results in Russia and a good performance in Mongolia.
The division’s $179m (R3.2bn)revenue was down 39% as the Ukraine war affected the business in Russia and reduced product lines and constrained supply chains.
“This performance was enabled by sales from available prime product inventories at the start of the financial year as well as a reasonable after-market parts supply. Linked to this, customers still have a high demand for available products realising good margins,” the group said.
Revenue fell 53% to $116.2m. Due to a higher after-market revenue mix, operating profit from trading activities fell 37%.
Progress was made in restructuring the cost base.
The division reported $28.6m operating profit versus $34.7m in the prior period.
In the consumer industries division, Ingrain's revenue of R2.8bn was 23.3% higher, supported by higher commodity prices and export volume growth, which offset flat domestic sales volumes.
Alcoholic beverages sector volumes were flat year-on-year, while the confectionery sector continued to show robust volume growth. The latter was offset by reduced volumes in the coffee creamer sector due to power outages and demand constraints.
Ebitda in this division was R353m versus R403m in the prior period, impacted by operating efficiency losses, increased fixed costs from investments in asset care and critical skills as well as increased maintenance costs following unplanned plant breakdowns.
The car rental and leasing business Zeda Limited was exited and the effect to the debt relating to this business would be reflected in September 2023. Maximum debt levels were resent and maturing debt was repaid.
In January Barloworld’ shareholders received a 550 cents per share special dividend from the sale of Zeda. The group remained satisfied with the financial headroom of R16bn.
BUSINESS REPORT