Retrenchments down the line for Barloworld as it prepares for post-Covid-19 trading
CAPE TOWN – Distribution group Barloworld has said it plans significant group-wide retrenchments before the end of the year to prepare itself for trading post the coronavirus pandemic.
The group, which has more than 15 000 employees, said the retrenchment plan was in addition to a 12-month remuneration sacrifice plan implemented this month.
It said in a trading statement yesterday that retrenchments would affect its automotive and logistics division, equipment southern Africa operations and the corporate centre.
A spokesperson said they did not know how many jobs would be cut as yet.
The spokesperson said its operations had been affected by the collapse of oil prices and commodity producing country prospects which were expected to deteriorate even further in the short to medium term.
Barloworld said recovery in sub-Saharan Africa was likely to take longer than global averages.
The group said it had a strong balance sheet and stable mature business platforms to weather the storm. The board and management were focused on cash preservation, lowering operating costs in line with reduced activity, and ensuring the business was positioned for a recovery.
Austerity measures and cost-saving initiatives already implemented were expected to yield cost savings.
The group said: “Most of our businesses have been severely affected by restrictions on trade as well as various lockdowns and the prospects of a quick recovery are low, with some of the changes expected to be structural and trading activity expected to be lower for longer.”
In April, the automotive and logistics business volumes were significantly impacted by the lockdown in South Africa, even though all businesses in the division were open.
Fleet utilisation at Avis Budget Rent-a-Car fell from over 75 percent before the pandemic to below 30 percent, but activity was improving with the easing of lockdown restrictions. Rentals in local and replacement segments had also increased.
In the Motor Trading division, activity in after-sales was limited and the new vehicle market fell more than 90 percent compared to pre-lockdown levels, and vehicle volumes were expected “to remain under significant pressure.”
The Avis Fleet business continues to operate, though activity is being negatively impacted by some customers that were experiencing challenges.
In Logistics, about 55 percent of the transport fleet had been operational during the lockdown; 60 percent of warehouse personnel were active and 50 percent of the business that supported the waste industry was operational.
The freight forwarding operations were hardest hit with average volumes reduced to nearly 35 percent, but transport volumes had increased to more than 80 percent of pre-lockdown levels after the easing of restrictions, and freight forwarding to over 60 percent.
Activity levels in Equipment southern Africa continued to recover with April ranging between 35-45 percent compared to pre-lockdown levels.
Equipment sales were boosted by demand for mining equipment in South Africa and the rest of Africa.
In Russia, trading remains resilient, supported by strong sales in the gold mining segment and the after-market performance.
As at April 30, 2020, the group had more than R5 billion in cash, with the net debt increasing to over R4bn in line with operational cycles.
Headroom on committed facilities for both the local and off-shore operations remained substantial at over R7bn and there were non-committed facilities of over R3bn.
Barloworld's share price rose 1.88 percent on the JSE yesterday to close at R68.39.