Johannesburg - Barloworld, the listed distribution group, is expanding its fleet services business into Africa.
Clive Thomson, Barloworld’s chief executive, confirmed yesterday that the company already had a presence in Mozambique and Ghana and was looking at expanding into east Africa.
It also acquired the 25 percent minority share in its fleet services business in Lesotho.
“This business [fleet services] has done very well in South Africa and we believe we can replicate that model elsewhere in Africa,” he said.
Thomson said Barloworld would like to create hubs for both west and east Africa and expand into other territories on the continent from there.
He said Ghana would be its hub in west Africa and it was “eyeing” and in negotiations for a business in east Africa that would become the hub for that region.
Thomson said Barloworld in the longer term saw Avis Fleet Services having a fairly extensive operation on the continent outside South Africa.
“We’re starting with this now and are looking for it to get critical mass in the next three to five years,” he said.
Barloworld’s automotive and logistics division, which includes the car rental, motor retail, fleet services and logistics businesses, provided the highlight of the group’s financial performance in the year to September.
The group reported yesterday that full-year revenue grew 11 percent to R65.1 billion.
Don Wilson, Barloworld’s finance director, said about R2.1bn was added to the group’s total revenue by a weakening of the rand against the major currencies that Barloworld dealt in.
Operating profit improved by 18 percent to R3.53bn. Headline earnings a share rose by 26 percent to R8.60.
Cash generated from operations rose to R4.26bn compared with the R43 million utilised in the previous year.
The total dividend a share rose by 27 percent to R2.91. Thomson added that the dividend declared reflected the strong headline earnings a share growth and cash generation in the period.
The automotive and logistics division improved revenue by 17 percent in the year to R34.4bn, to make it the largest contributor to group revenue.
All the businesses in this division increased revenue and its operating profit grew by 28 percent to R1.48bn.
However, the biggest contributor to the group’s operating profit was the equipment and handling division. It increased operating profit by 19 percent to R1.78bn on a 6 percent growth in revenue to R30.68bn.
Thomson said the equipment division’s results were boosted by the recent acquisitions of the Bucyrus distribution business in southern Africa and Russia, which performed ahead of expectations despite facing a difficult external environment because of reduced capital expenditure by global mining companies.
He said the outlook for mining in the coming year in southern Africa remained mixed and Barloworld expected a further decline in traditional Caterpillar mining units in the region.
However, Thomson said the outlook for infrastructure and construction in southern Africa was showing renewed optimism, driven by proposed projects in transportation infrastructure, power and mining.
He said that Barloworld was expecting a stable result from its motor retail business in southern Africa because the outlook for the automotive industry in South Africa next year was expected to be flat as consumers battled with high levels of household indebtedness and new vehicle price inflation.
Barloworld shares rose 1.76 percent to close at R98.20 on the JSE yesterday. - Business Report