Barloworld reports improved finances in first quarter
SHARES in Barloworld declined by 1.47 percent yesterday, despite the listed distribution group reporting a substantially better financial result in the first quarter of its current financial year.
The group also issued a cautionary announcement yesterday, advising shareholders that the company had entered into discussions on a potential acquisition adjacent to its automotive business.
If successfully concluded, this transaction might have a material effect on the company’s shareholders, it said.
It said the proposed transaction was in line with the company’s strategy to review opportunities to ensure the optimal deployment of capital into value-creating business.
Barloworld said the group benefited in the first quarter of the year from the implementation of management’s strategic objectives focusing on fixing and optimising the performance of its existing businesses.
The equipment and logistics divisions both achieved improved results in the first quarter while the results of the automotive division was slightly behind the first quarter performance in the previous financial year.
Barloworld said Equipment Southern Africa’s profitability was significantly improved compared to last year and the firm’s order book at end December remained strong.
“It reflects increased activity in the mining and contract mining sectors as commodity prices and confidence levels continue to improve,” it said.
The group said its joint venture in the Katanga region of the Democratic Republic of Congo (DRC) generated first quarter profits well ahead of the prior year, adding that indications were that this strong performance would continue as mining activity in the region continued to pick up.
It said trading activity in Equipment Russia reached record levels in US dollar terms in the first quarter, with strongly improved firm earnings.
“The firm order book at the end of December is down on September but remains strong with the mining pipeline bolstered by a number of project opportunities,” it said.
Equipment
Barloworld previously gave notice of its intention to dispose of its Iberia equipment business with group chief executive Dominic Sewela confirming in November it wanted to sell the business at a premium to its net asset value of €170 million.
The group said yesterday that negotiations for the disposal of this business were at an advanced stage.
Barloworld said the financial results of the automotive division were slightly behind last year in difficult first quarter trading conditions.
It said car rental showed an improved performance with growth in both rental days and rate per day but motor trading was impacted by weakening demand in the premium market segment and margin pressures across the brands.