Barloworld has reported an 18% increase in operating profit to R3.53-billion for the year ended September 30, compared with the previous financial year. Revenue was up 11% to R65.1-billion.
Barloworld FD Don Wilson says the weakening rand added R2.1-billion in revenue.
Barloworld represents the Caterpillar, Hyster and Massey Ferguson brands in South Africa, among others.
It is not all good news, however, as Barloworld CEO Clive Thomson notes that the company’s equipment order books showed a significant decrease, compared with last year.
Firm back orders for the Equipment South Africa division stood at R3.5-billion in September, compared with R5.3-billion in the same month last year.
“We certainly have seen a decline in firm back orders,” says Thomson.
Equipment Iberia managed to stem the bleeding, reporting a €1.3-million loss, down from the previous year’s €13.3-million loss. However, its order book was more than cut in half to €50-million at the end of the financial year.
Equipment Russia shows a similar trend, with firm customer orders at $40-million on September 30, compared with $77-million in the previous year.
Thomson says US equipment manufacturer Caterpillar has seen a “significant slowdown in [global] mining capital expenditure in the last 12 months”.
He says the company only expects to see a recovery in the “back-half of 2014”.
However, Thomson warns that visibility is not strong here, as Caterpillar’s expectation is based on its view of the business cycle, and not on firm orders from customers.
The slowdown in mining spend also spells a lull in production at Caterpillar’s plants. The subsequent surplus capacity means that there is “no pressure” on customers to place their equipment orders far in advance, as has long been the case in the capital equipment market.
This means there is “less visibility” of mining project pipelines, notes Thomson.
The construction sector is also not much aid in boosting Barloworld’s equipment order books, with South Africa showing little growth, but Angola and Zambia proving promising.
Thomson expects Barloworld’s equipment division to deliver fewer Caterpillar units in 2014 than in 2013, continuing the current downward trend. However, the parts and services business is expected to continue growing.
He is hopeful of rebuilding Barloworld’s equipment order books towards the end of 2014, in line with Caterpillar’s forecast for stronger mining capital expenditure.
Thomson regards the performance of Barloworld’s Automotive and Logistics division as “the highlight” of the past financial year, with revenue up 17% to R34.4-billion and operating profit at a record R1.48-billion, up 28%.
Thomson says all businesses within the division – retail, fleet services, car rental and logistics – performed well.