Roy Cokayne
Barloworld has sold its Belgium handling business for e7.5 million (R88.9m) and is considering “strategic options” for its handling business in the Netherlands.
The sale of its Belgium handling business follows its disposal last year of its US handling business to Briggs and LiftOne for about R460m and its UK handling business to Briggs Equipment for R465m.
The group said it completed the sale of its handling business in Belgium to enable the continued redeployment of capital into higher-returning opportunities.
Clive Thomson, Barloworld’s chief executive, confirmed yesterday that the sale of the Netherlands handling business could be one of the options it would consider, but stressed the group did not have any plans to get rid of its Southern African handling business.
Thomson said the group was comfortable with the Southern African handling business because it had both the Hyster and SEM brand plus its agricultural arm, and had a much higher market share and was making better margins and saw better growth prospects for the business in Southern Africa and Russia.
“So we are committed to the Southern African component but are looking at strategic options for the Netherlands component,” he said.
Thomson said it was difficult to put a timeline to the group’s consideration of the strategic options for the Netherlands handling business, particularly as this was not urgent because the business was making money.
“The two biggest [handling] businesses were in the US and UK and released R1 billion. Belgium was quite small. It’s still R85m and nice to get, but it’s not R1bn. The Netherlands is more or less the size of the Belgium business and making money. It’s not a pressing issue for us but we will continue to look at the options,” he said.
A strong overall performance by Barloworld’s automotive and logistics division drove the financial performance of the group in the six months to March. It reported a 31 percent growth in headline earnings a share to R32.09 in the reporting period. Revenue rose by 11 percent to R31.3bn, with the newly acquired Bucyrus business in the equipment (in) Southern Africa and Russia contributing to this increase.
Operating profit increased by 14 percent to R1.46bn and the operating margin improved to 4.7 percent from 4.6 percent.
A dividend of 96c a share was declared, which is 20 percent higher that the previous corresponding period.
Thomson said within the group’s equipment division, the newly acquired Bucyrus business performed in line with expectations and offset revenue declines in the traditional Caterpillar business caused by a slowdown in mining capital expenditure.
He said the world economy continued on a path of gradual recovery and the Chinese economy should continue to support long-term demand for commodities despite showing some signs of slowing.
But Thomson said mining sentiment in the short term had been impacted by the pronouncement of newly appointed chief executives of certain large global mining firms of a scaling back in new project expansion, capital expenditure curtailment and cost containment. “While this is leading to a near-term slowdown in global mining investment, we believe the medium- to long-term outlook for the industry remains positive.”
Thomson said the group was expected to continue to make good progress in the second half of its financial year and deliver a solid result for the full year to September despite some short-term headwinds in the mining sector.