However, the development of a new headquarters for Barloworld Logistics does not necessarily mean that the business will remain part of Barloworld in the future.
Dominic Sewela, the group chief executive of Barloworld, said this week that the logistics business had achieved a drastic turnaround in reporting a 94percent increase in operating profit to R99million in the six months to March from R48m in the prior period, despite revenue decreasing by 6.6percent to R2.9bn in the same period.
Sewela added that if the logistics business team was able to remain on the current trajectory, he was comfortable it could reach the initial target of a return on invested capital of between an 8to 9percent and would be retained by the group.
“Should they not attain that, we would definitely exit the business. We would make those announcements in September.
“We have R2.7bn tied up in the (logistics) business. We won't tie it up unless we believe it is able to achieve those results,” he said.
However, Sewela said Barloworld Logistics was a huge operation, and even if the group was to sell the business, it still had to continue to invest in it.
“I'm a firm believer that even when you sell a business, don't sell it in a bad state, because you are not going to realise your capital,” he said.
Sewela said this had been done with the equipment business in Iberia, which had been sold for R2.3bn, which was above the net asset value of the business.
Barloworld Logistics’ new headquarters in Irene Boulevard is being developed by leading property developer Abland, Giflo Developments and SOM.
The business would vacate its Sandton offices to occupy the new building next year.
Thinus Delport, the development director at Abland, said that the Irene Boulevard started as a retail centre, but had evolved into a mixed-use precinct that was integrating retail and commercial offerings.
Located on Alexander Road, just off the Botha Avenue interchange, Irene Boulevard is well-located with exposure to the N1 highway and easily accessible.
Delport said that there were plans for a future Gautrain station in the vicinity, which would bring even more attention to the node.
He said the mixed-use precinct came to life after Abland shared their masterplan with Barloworld and they immediately bought into the bigger concept.
Kamogelo Mmutlana, the chief executive of Barloworld Logistics, said the new headquarter for the business was a physical embodiment of their vision for the company in that it was modern, future-focused and fit-for-purpose.
Delport said that the precinct would create a bespoke lifestyle and a 16 000m² shopping centre, with the Barloworld Logistics headquarters comprising 5500m² of the property.
The retail element of the precinct is in phase two of the development, which commences in the third quarter.
- BUSINESS REPORT