Industrial equipment group Barloworld on Monday posted a better-than-expected 120% increase in full-year profit, helped by surging demand for equipment from the mining sector.

The JSE-listed company more than doubled headline earnings to R4.65 a share in the financial year ended September 30, from R1.71 a share in the previous year.

Barloworld’s revenue was up 22% to R49.8-billion, while its operating profit climbed 51% to R2.3-billion. The group also reported strong cash generation from operations of R3.1-billion. A dividend of R1.55 a share was declared, up 107% from last year.

“We have achieved better-than-expected results and expect to maintain the positive momentum into the new financial year. While commodity prices are off their highs, they are anticipated to remain favourable for mining investment and production,” CEO Clive Thomson said at the results presentation in Johannesburg.

He said the group was positioning itself to take advantage of further growth opportunities in the coming years. Barloworld bought the remaining half of its Russian Caterpillar dealership in October 2010, and this has performed ahead of expectation.

“Our Russian business posted excellent growth in profit to R226-million at 8.9% margin. With the opening of a world-class after-market service centre in Novosibirsk, in the centre of a growing mining district, the outlook is encouraging,” he said.

The company’s equipment division in Southern Africa also posted a healthy 50% growth in revenue at R12.3-billion, realising an operating profit growth of 69% to R1.23-billion, achieving a profit margin of 9.8%.

Barloworld’s automotive and logistics divisions reported “pleasing” performances in a competitive trading environment, while the handling division showed a significant turnaround from last year.

Meanwhile, Thomson said Barloworld was in discussions with Caterpillar, which acquired equipment manufacturer Bucyrus in July, for the distribution rights in its territories.

The company disposed of its loss-making Logistics Middle-East and Asia noncorporate trader business and car rental business in Scandinavia, for which it received the final instalment of R174-million in December 2010. It put the cash towards expanding its equipment business in Russia.

Barloworld expected the favourable mining investment and production climate to benefit the company during the first half of 2012, although Thomson expected the growth in the second half to be slower, owing to the higher base.

“Overall, we expect to make solid progress in the year ahead,” he said.

Barloworld shares where trading at R70.48 apiece on Monday afternoon, down slightly from Friday’s closing price of R70.70 a share.
 

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