Barloworld racks up solid growth as economy wolfs down cars, cement

the acquisition of car rental company avis, along with higher cement and car sales on the back of the buoyant domestic economy, helped barloworld grow revenue 7% to r18,8bn in the six months to march, compared with the same period last year.

operating profit before goodwill was up 25% at r1,5bn, but headline earnings slid 2c a share to 372c a share.

the group attributed the flat headline earnings a share to the nonrecurrence of a r100m pension provision writeback and the secondary tax on companies on a higher special dividend from its ppc unit last year. an increase in shares in issue also influenced the results.

the share price took a knock of 5,05% yesterday, with one industrial analyst saying headline earnings were slightly lower than he expected.

another analyst was disappointed that some struggling foreign operations had not yet been turned around.

barloworld’s main profit engines — the cement, equipment and motor divisions — all performed well, with much of the improvement attributable to the buoyant conditions in sa.

ceo tony phillips said yesterday 83% of the group’s operating profit before goodwill came from southern african operations in the period under review, compared with 71% a year earlier.

phillips said the equipment business, which comprised mainly caterpillar, grew 38% in southern africa, reflecting improved construction spend.

there were severe shortages of large tyres and steel components for equipment, but rivals faced the same problems, he said.

in the motor division, avis and high new-car sales in sa were responsible for the bulk of growth. phillips said the group’s australian motor business was turning around.

ppc, the group’s cement and lime producer, had a bonanza, said phillips. solid growth was achieved from an already high base, mainly on the back of higher residential building demand, which had been stimulated by lower interest rates. ppc’s sales climbed 11% to r1,8bn.

the industrial division’s revenue and profits dropped as equipment sales in the uk declined and restructuring costs in services took their toll. in the us, the lift truck business was strong, but the freightliner business was affected by lower fleet activity.


in the steel division, profits increased but revenue fell after the group shut down its stainless steel tube manufacturing activities in sa.

these had become uncompetitive amid higher stainless steel prices and the stronger rand.


barloworld declared a 13% higher dividend at 130c a share in light of the positive outlook for the rest of the year.