Fleet management and logistics solutions company Barloworld on Monday posted a 5% increase in its operating profit for the six months ended March 31, to R1.84-billion, as its automotive division achieved record results and its overall equipment division boasted strong growth amid challenging global trading conditions.
The Southern African equipment division delivered operating profit of R713-million, with aftermarket revenue increasing 3%. With more greenfield mining projects coming on line this year and a R1.9-billion order book at end-March, the company was set to continue benefiting from improved mining activity.
Further, the “shining star” for the interim period, was the Russian equipment division, which realised a 24% increase in operating profit, to R262-million, as mining equipment demand and parts sales rose.
A “record” mining truck order, secured with Polyus Gold, valued at $120-million and to be delivered over the next two years, also bodes well for the division.
However, its Iberia equipment division delivered “disappointing results”, with operating profit down 68% to R8-million. Barloworld attributed the decrease to low activity levels in Spain and Portugal, and its Energyst associate producing a significant loss during the period owing to a contract loss in Argentina.
Meanwhile, the company’s automotive division also posted solid results in a “very competitive” and challenging trading environment, with operating profit up 14% to R863-million.
Barloworld expects new-vehicle sales to remain under pressure, impacted on by declining consumer and business confidence.
Noting that the logistics business was a good indicator of the state of the economy, Barloworld CEO Dominic Sewela pointed out that the division saw year-to-date profit of R51-million, down R11-million from last year, as tough trading conditions persisted.
Looking ahead, he said the company continued to see signs of slowing in the supply chain and transport business, as uncertainty remained.
However, Sewela remained positive overall, highlighting that if the company achieved order in its European equipment division, the company would continue to focus on acquisitive growth to further bolster its books.