Industrial conglomerate Barloworld on April 23 said it expects the operating environment to remain “weak and volatile” in the near term, with significantly lower activity levels in its automotive division.
The statement follows the latest consensus macroeconomic forecasts that indicate that most economies, including South Africa and the rest of Africa, are likely to enter a deep recession in the first half of this year, with recovery only starting in 2021.
Activity levels in Barloworld’s equipment sector in Southern Africa and logistics divisions are also currently low but are improving as customer activity levels improve as they adjust to operating under a lockdown environment.
In Russia, trading remains strong and the current impacts of Covid-19 have been limited.
Taking this into account, Barloworld said in its statement that it has a strong balance sheet and stable mature business platforms to weather the storm. The company also advised that it was well positioned for future recovery, although in the short term, it was “actively focused on both cost reduction and containment, as well as driving operational efficiencies for the remainder of the financial year”.
Barloworld’s financial year comes to a close on September 30.
With lockdown restrictions in various regions causing delays in internal consolidation and review processes of its financials, Barloworld will also be delaying the release of its interim results, for the six months ended March 31, to the end of June.
Additionally, when elaborating on cost-saving initiatives, the company noted that its internally imposed austerity measures were expected to yield significant cost savings by the end of the 2020 financial year, as well as lowering the overall cost base going forward.
The company also adopted various additional initiatives, including a nonexecutive directors’ fee reduction of 25% for three months starting May 1; a suspension of retirement fund contributions for up to a year in line with the applicable fund rules and country specific legislation.
Considering that this approach affects all employees who are members of the respective funds, excluding those who are near retirement age (60+) and who will be effected from May 1, Barloworld has effected a 12-month remuneration sacrifice plan for employees at executive, senior, middle and junior/supervisory levels using a sliding scale that will see executives taking the highest total guaranteed pay reduction with effect from May 1.