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Barloworld’s shares slide on R1bn writedown despite robust interims

BARLOWORLD says its operating environment continued to be difficult, with the impact of Russia’s invasion of Ukraine compounding an already constrained global supply chain. Picture: Supplied.

BARLOWORLD says its operating environment continued to be difficult, with the impact of Russia’s invasion of Ukraine compounding an already constrained global supply chain. Picture: Supplied.

Published May 24, 2022

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SHARES in heavy equipment and motor dealership group Barloworld slid after it said yesterday that while it delivered a robust set of results in all its business during the first half of 2022, its operating environment has been hampered by continued supply chain constraints and the impact of Russia's invasion of Ukraine.

In its interim results for the six months ended March 31, 2022, released yesterday, the company said it had a R1 billion non-operating and capital items, which resulted mainly from impairment of non-current assets in equipment due to the war.

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Barloworld's share price on the JSE slid 6.65 percent to R97.50 at 5.11pm yesterday.

Last week, Barloworld said it had cancelled its shares on the London Stock Exchange on October 1, 2021, due to the limited trading and liquidity of the ordinary shares on the exchange, and because there was no visible benefit in maintaining the secondary listing. The company maintains its primary listing on the JSE.

Headline earnings per share (Heps) was 756 cents, compared to 362c in the prior period, driven by a robust performance from Equipment Southern Africa, resilient Equipment Eurasia and Ingrain, as well as strong results from the car rental and leasing business.

Revenue from continuing operations of R18.4bn on March 31, 2022, was 13.6 percent ahead of the prior period’s R16.2bn.

"This was driven by improvement in trading activities across most of our business segments. However, group revenue increased by 5.9 percent compared to the prior period when an adjustment was made for the revenue relating to Motor Retail," the group said.

Barloworld paid a special dividend in January 2022 of R2.3bn.

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Chief executive Dominic Sewela said: “This strong set of results demonstrates the intentionality of our approach to capital allocation. Our operating environment continued to be difficult, with the impact of Russia’s invasion of Ukraine compounding an already constrained global supply chain. However, our active move toward defensive, relatively asset light and cash generative industrial sectors has bolstered the business against these macro headwinds."

The operating profit from continuing operations increased by 25.7 percent to R1.9bn, with Ingrain and Equipment Mongolia.

Group operating profit, which includes the car rental and leasing business as held for sale, increased by 34.7 percent to R2.8bn.

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"Capital allocation remains key; the group has been intentional in allocating capital, investing and distributing cash resources to increase its efficiency and maximise shareholder value," Sewela said.

Barloworld paid £68 million (R1.3bn) towards the UK pension fund deficit, repaid debt of R1.6bn and increased working capital as businesses re-fleeted. As a result, the group free cash outflow was R1.9bn.

Looking forward, the company said that despite the prevailing uncertainties in its operating environment, it was cautiously optimistic and encouraged by the results of its strategy.

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“There are a number of factors outside of our control, which we will seek to proactively manage and overcome. However, there are a lot of factors within our control and the steadfast execution of our strategy and ambition places us in a comfortable position to withstand the uncertainties ahead,” said Sewela.

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