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Industrial giant Barloworld might need to write down assets in Russia and Mongolia due to the war in Ukraine

Revenue exceeded the comparative period by 11 percent, with Russia being the main driver of this increase. Photo Supplied.

Revenue exceeded the comparative period by 11 percent, with Russia being the main driver of this increase. Photo Supplied.

Published Mar 30, 2022


BARLOWORLD’S Russia and Mongolia Caterpillar operation, Equipment Eurasia, is experiencing restricted trading due to supply chain disruptions, some cancellations among customers, and certain assets might need to be impaired.

The group said in a trading statement of its operations in Russia and Mongolia: “The situation is fluid, and the team needs to be adaptable to ensure compliance with emerging regulatory changes that impact us both internally and externally.”

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The share price surged 5.1 percent to R112.55 yesterday morning, a slight recovery from the about R148 it reached until the middle of February, when Russia invaded Ukraine.

Barloworld management said they expect restricted trading conditions to continue, despite a record firm order book.

“We anticipate further cancellations once the full extent of sanctions, supply chain disruptions and recent announcement by Caterpillar of the suspension of their manufacturing facilities at the Tosno plant in Russia has been fully absorbed.

“We remain in close contact with our customers, keeping them up to date as the process unfolds.”

Management said the actual circumstances at the time of reporting would dictate how this aspect of the accounting or International Financial Reporting Standards (IFRS) was dealt with.

Despite the disruptions caused by the Russian/Ukraine conflict, as well as the continued impact of Covid-19 on Mongolia, the division had delivered exceptional results.

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Revenue exceeded the comparative period by 11 percent, with Russia being the main driver of this increase.

Operating profit improved by 34 percent as at February 2022, driven mainly by strong mining sales, a diversified commodity mix, after market growth and good margin realisation.

The order book for Equipment Eurasia at February 28 reached a record $314 million, well above September 2021’s $224m and September 2020’s $105m, driven by the mining order book.

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Barlworld’s Ingrain subsidiaries’ performance was well ahead of the prior four month period. Revenue was up 48.1 percent, while the operating margin was lower.

Domestic starch and glucose volumes increased by 30 percent, while agri-product volumes were supported by increased maize grind across the business.

Barloworld group revenue from continuing operations and operating profit increased by double digits when compared to the prior five-month period ended 28 February 2021.

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This was driven by the robust performance from Equipment southern Africa, Equipment Eurasia, and Ingrain, together with strong results from the car rental and leasing business.

Equipment southern Africa’s revenue for the five-month period to February 28 was up 2.3 percent mainly driven by strong machine and parts sales in greater Africa. This offset the low activity in South Africa, which was impacted by delayed deliveries.

Botswana joined Mozambique, Zambia, and Angola in delivering exceptional growth compared to the comparative period.

The firm group order book increased by 43 percent to R4.6 billion, from R3.2bn in December 2021, on the back of strong mining demand and improved activity in the second half of last year, mainly in South Africa.

Bartrac, the joint venture in the Democratic Republic of Congo, returned to profitability.

Avis Fleet continued to post strong results with operating profit 17 percent higher than the prior comparative period and 10 percent higher than the same period in 2020 pre-Covid.

The group remained within targeted debt, and gearing levels.

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