Clive Thomson, CEO of Barloworld. Picture: FINANCIAL MAIL
Clive Thomson, CEO of Barloworld. Picture: FINANCIAL MAIL

INDUSTRIAL group Barloworld grew its revenue by 11% in the six months to March, to R31.3bn.

This growth supported 31% growth in headline earnings per share, from 245c to 321c.

There were solid performances, especially from new acquisitions across divisions, CEO Clive Thomson said.

He praised a "strong" financial performance.

"These strong results have enabled us to raise our interim dividend by 20% to 96c," he said.

Barloworld is a distributor of major international brands, including Caterpillar heavy earthmoving equipment, providing integrated rental, fleet management, product support and logistics solutions.

A highlight of the six months was the performance of Bucyrus equipment.

Caterpillar bought peer US mining machinery group Bucyrus in 2011 for nearly $9bn, adding significant capacity to both its own and Barloworld’s product ranges.

"The Bucyrus operations have already met expectations in the period. They actually offset revenue declines in the traditional Caterpillar business on the back of a slowdown in mining capital expenditure," Mr Thomson said.

The Iberian business where Bucyrus operates turned a profit.

Barloworld sold its handling business in Belgium and said it would redeploy the capital there.

Looking at an operational breakdown, the equipment division’s revenue grew to R9bn. This was R1.5bn or 19.5% ahead of the prior year, mainly from the newly acquired Bucyrus businesses.

General mining activity had shown some signs of slowdown, the group said, particularly in Mozambique and Botswana, while contract mining in South Africa was also down on last year.

Mining in South Africa has struggled because of labour unrest, rising costs and a lack of competitiveness compared with other geographies such as Australia and China.

Construction and infrastructure demand showed some improvement, particularly in Angola, but margins were negatively affected by intense competition in this segment, Mr Thomson said.

The equipment division’s operating profit to March was recorded at R654m, slightly below the comparative figure for 2012. The operating margin to March of 7.2% was worse than the 2012 period’s 9.1%. The drop was from lower margins and currency adjustments due to rand weakness and some increase in fixed expenses on the back of investments made for future growth.

"Bartrac, our joint venture in the Katanga province of the Democratic Republic of Congo, continued the strong performance," Mr Thomson said.

Barloworld looks at its Russian equipment division separately.

Activity in Russian mining continued positively in the first half of 2013. Total revenue to March of $248m was recorded, which was $38m or 18.2% ahead of 2012, as weaknesses in the coal sector were offset by growth in the gold and nickel sectors. Revenue in the Russian Far East was well ahead of 2012.

After-sales revenue continued to grow strongly, improving by 24% compared with the first half of 2012.

Looking at the global equipment and handling divisions in total, equipment recorded revenue of R13,7bn. It had recorded R11.2bn in the six months to March 2012. Southern African revenue was R9bn, Europe’s was R2.5bn and Russia’s was R2.2bn. Handling revenue was R1.3bn globally.

Barloworld restructured its handling businesses in the year. The restructured business generated revenue of £96m, which was 5% up on the comparable adjusted revenue following the disposal of Handling US and UK in 2012.

Operating profit to March of £2.6m was 9.9% above last year, which included £1.4m profit from the US and UK businesses.

The automotive and logistics division generated revenue of R16.3bn for the six months to March, a 15% increase on the prior period, with all business units producing good revenue growth, Mr Thomson said.

The division increased operating profit to R673m, a 27% improvement compared with R531m in 2012.

But debt rose for the Barloworld group. Net debt increased R3.5bn to R11bn at March, mainly as a result of increased working capital worth R2.4bn from the acquisition of the Bucyrus distribution business in Russia and the Manline acquisition in Logistics southern Africa.

All divisions were focused on driving down their working capital levels in the second half to below the previous year’s closing.

"I am confident we will make quick progress here," Mr Thomson said.

He believed the world economy was on a path of gradual recovery.

"The Chinese economy has of late shown some signs of slowing but should nonetheless continue to support long-term demand for commodities," he said.

"Notwithstanding some short-term headwinds in the mining sector, the group is expected to continue to make good progress in the second half and deliver a solid result for the full year to September 2013."

© BDlive 2013