BARLOWORLD says its Russian division has continued to post robust results and its logistics turnaround project remains a priority. 
 Simphiwe Mbokazi African News Agency (ANA)
CAPE TOWN -  Barloworld lifted normalised headline earnings per share by 14.1percent to 521.4cents in the six months to end-March this year after a strong performance from its southern Africa equipment, motor businesses and its Russia division.

The group raised its interim dividend 13.8percent to 165c.

Chief executive Dominic Sewela said they would consider share buybacks.

Sewela said the results were “pleasing”, given the tough environment in South Africa for the automotive and logistics sector.

He added that its Russian division continued to post robust results. It posted record results in the previous financial year.

Sewela said Barloworld was in talks to acquire Wagner Asia Group, a Mongolia-based equipment dealer, a transaction that might materially affect the share price should it succeed. Sewela added that the business looked attractive in terms of revenue and profit.

The logistics divisional turnaround project continued to be a priority.

Sewela said that he was optimistic about the prospects for the second half, given the firm order books in southern Africa and Russia.

He said the group expected to complete the Wagner Asia Group acquisition in the second half.

In addition, once-off costs in the first half - an R88million payment due to changes in UK pension funds, and a R24m cost for the BEE transaction - would not be repeated in the second half.

Barloworld is launching its innovative “Khula Sizwe” B-BBEE transaction, which will enable black people to be shareholders in a black-owned property business by October.

Sewela said there had been “a great deal of interest” in the scheme, and they hoped to obtain investments from about 63000 black people by month-end when the offer to buy the shares closes.

“A decision might be taken closer to the time to extend the offer by a few days if necessary,” Sewela added.

In the past six months, the South African mining and equipment units performed strongly, due to favourable commodity fundamentals and a preference toward contract mining.

In Russia, the impact of increased tariffs on US manufactured products was less than anticipated. Equipment Southern Africa's results were driven by demand for mining equipment and machine deliveries for large surface and underground mining to Mozambique, Zambia and South Africa. Its order book remained firm.

New products as well as more competitive financing saw growth in construction equipment sales. Equipment Russia's revenue fell as large package mining deals last year were not repeated. However, this was offset somewhat by a strong increase in aftermarket sales.

“The outlook for mining activity in Russia remains positive, with a strong pipeline for major projects,” Sewela said.

The automotive division's operating profit increased slightly at R885m and the operating margin improved from 5.7 to 6.2percent.

Revenue, however, fell 7.7percent to R14.2billion (from R15.4bn), due mainly to the change in revenue recognition for Mercedes-Benz passenger vehicle sales in the prior period.

Sewela said the South African market remained tight for luxury vehicles, and demand had also softened in the second-hand market, which he attributed to low consumer confidence.

Avis Fleet reported a 4.8percent decline in revenue, despite operating profits rising 6.8percent to R329m.

Total fleet under management grew by 2.7percent on the prior period. The business was exiting its loss-making operation in Tanzania.

Motor trading revenue was down by 9.7percent, but cost containment resulted in an improvement in operating profit.

The group said new vehicle sales were expected to remain constrained in the second half.

The logistics business revenue was mainly impacted by reduced revenues in the supply chain management business, following a decision to close the KLL business. Logistics was expecting a stronger second-half performance, and the disposal of SmartMatta and Middle East businesses was due to be finalised at the end of the second half.

Barloworld shares rose 1.83percent on the JSE yesterday to close at R128.75.

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