CAPE TOWN - THE PRICE of Barloworld’s shares increased 3.15 percent yesterday afternoon after it resumed dividend payments and returned a special dividend of 200 cents per share to shareholders.
The international heavy equipment, automotive and food processing group declared an interim dividend of 137c per share, compared with no dividend declared in the first half of last year during the Covid-19 pandemic.
This was after a strong balance sheet was maintained in the six months to March 31, and the cash balance was robust at R8.3 billion.
Headline earnings per share leapt to 367c per share for the six months to March 31, compared with 70c in the first half last year.
Group revenue of R28.6bn was up 6.5 percent, with revenue from continuing operations up 13 percent to R20.2bn.
Operating profit increased 44 percent to R1.9bn. Cost savings of R1.2bn were realised from operations through the period.
Chief executive Dominic Sewela said decisive actions taken last year were beginning to yield positive results.
Recent acquisitions delivered better-than-expected performance, with Equipment Mongolia and Ingrain contributing R3.4bn in revenue, or 17 percent of total revenue, and 23 percent of operating profit.
Measures taken last year in the face of the Covid-19 pandemic included steps to preserve cash, and a focused balance sheet and working capital management strategy, which had resulted in cash generation exceeding expectations, said Sewela.
Free cash generation of R4bn through the period, excluding the Ingrain acquisition of R5.3bn, had exceeded group expectations.
Net borrowings of R4.9bn had increased by R2.3bn as at March 31, from R2.6bn at September 30 last year, driven solely by the R5.3bn Ingrain acquisition, which was partially paid down by cash from existing operations.
Higher earnings were due to a good performance in the equipment businesses and the contribution from the recent acquisitions.
The car rental and leasing businesses saw operating profit fall to R4.01bn from R4.83bn.
The operating profit from the industrial equipment and services businesses increased to R13.85bn from R12.75bn.
All conditions for the sale of the wholly-owned motor retail business to NMI Durban South Motors, in which Barloworld holds a 50 percent interest, with the deal effective June 1, had been met.
“Our strategy, based on an ambition to double the group’s intrinsic value every four years, means the group is actively pivoting its portfolio towards defensive, relatively asset-light and cash-generative industrial sectors, based on a business-to-business operating model,” he said.
The focus would remain on fixing and optimising the existing business portfolio to extract maximum potential and further acquisitive growth, once the remaining portfolio changes were completed, said Sewela.
The group’s outlook for this year remained positive as key markets recovered, commodity prices improved, customers increased capital expenditure and government stimulus spending supported infrastructure projects.
Mining activity was expected to improve from the buoyant commodity prices, albeit with lower production, while construction activity was expected to remain at the same levels in the short term.
The good outlook for maize in South Africa for the current season was expected to continue to support margins going forward, as local maize prices remained competitive.
The used car market was expected to be strong on the back of the shortage of new cars and anticipated higher prices. In the car rental and leasing business, the reduced fixed cost base would be maintained until the resumption of normal trading patterns.
Barloworld shares closed 1.67 percent higher at R98.31 on the JSE yesterday.
BUSINESS REPORT