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Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Income Tax Registration number 9000/051/71/5)
(Share code: BAW)
(A2X share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(JSE ISIN: ZAE000026647)
(Bond issuer code: BIBAW)
("Barloworld" or the "group")
VOLUNTARY TRADING UPDATE FOR THE FOUR MONTHS TO 31 JANUARY 2025
Overview
In the first four months of the 2025 financial year, Barloworld delivered revenue growth of 1%
above the revenue generated in the comparative four months of the prior financial year (the
"prior period").
The pressure of the compressed southern African trading environment was absorbed by the
expansionary environment in Mongolia which continues to grow driven by the government-led
expansion of transport infrastructure and external demand for its minerals and resources,
primarily from China.
Excluding gold and copper driven economies which delivered relatively stronger performance,
the southern African mining sector has remained somewhat constrained on the back of softer
commodity prices. Whilst the prospects for consumers have certainly improved when
compared to the prior period, consumers are still experiencing the vestiges of a historically
high interest rate environment and the high levels of unemployment.
Operational review for the four months to 31 January 2025 (the "period")
Industrial Equipment and Services
Following Caterpillar's exit from the Russian market and the restrictions of the sanction regime,
Vostochnaya Technica ("VT") can no longer be considered an equipment distributor as it
primarily provides services to its customers.
Therefore, in order to provide clarity in reporting, we have further sub-categorised the
Industrial Equipment and Services cluster into Industrial Equipment, which comprises of
Equipment southern Africa and Barloworld Mongolia (as Caterpillar equipment distributors),
and Industrial Services which comprises of VT.
Industrial Equipment:
Equipment southern Africa
Despite the challenging mining activity, overall machine sales revenue was in line with the
prior period and the business delivered growth in rental revenue, however, aftersales activity
in parts and services was lower than the prior period. As a result, overall revenue declined by
4.7% when compared to the prior period. Cost discipline and margin realisation resulted in a
stronger operating profit margin when compared to the prior period.
Bartrac, the joint venture in the Democratic Republic of Congo, which continues to operate
under difficult trading conditions delivered a positive share of profit, which was however lower
than the prior period.
The business generated free cash outflow in line with the trading patterns primarily due to
investments in working capital and rental fleet.
Barloworld Mongolia
Barloworld Mongolia's strong revenue growth continued, delivering revenue growth of 80%
relative to the prior period, supported by prime product sales and aftermarket demand. The
overall outlook remains positive. Aftermarket demand is expected to remain strong whilst
prime product sales are expected to moderate, especially compared to the strong sales in the
second half of the prior year. The business maintained strong operating margins during the
period.
Industrial Services:
Vostochnaya Technica
VT's revenue was impacted by lower activity levels following the curtailed inventory supply
and the reducing addressable market as a result of the evolving sanction regime. Revenue
declined by 23.3% relative to the prior period. Although the business delivered results above
breakeven, we expect it to continue to trade at breakeven levels. VT remains self-sufficient in
terms of its funding requirements. The independent investigation into potential export control
violations, commissioned by Barloworld, is ongoing.
Consumer Industries
Ingrain
Ingrain delivered an improved performance, with revenue 1.6% ahead of the prior period. The
business achieved pleasing EBITDA growth, supported by stable volumes and cost discipline.
Overall sales volumes were relatively flat compared to the prior period, and exports showed
strong growth which was offset by marginally lower domestic sales volumes.
The alcoholic beverages and paper sectors delivered a good result, with volumes well ahead
of the prior period. Confectionery sector volumes were down on the back of high stocks in
trade and cheaper finished goods imports, affecting local production. The prepared foods and
trader sector volumes declined as SAFEX maize prices traded above import parity over the
period, boosting the price competitiveness of starch imports into the country.
Despite these headwinds, efforts to streamline the business have yielded tangible benefits
into the current financial year, with better gross margins and operating margins achieved
relative to the prior period.
Ingrain continues to demonstrate resilience amidst varying market conditions and operational
challenges. Management remains committed to continuous improvement across Ingrain's
operations and responding aptly to changing market dynamics.
Funding and capital allocation
The group continues to purposefully allocate capital by investing cash in projects that aim to
yield returns higher than the cost of capital, distributing cash to shareholders and paying down
debt as part of ongoing efforts to maximise shareholder value.
A final ordinary dividend of R3.10 per share was paid in January 2025, resulting in a total
dividend of R5.20 per share paid in respect of the 2024 financial year, being R986 million in
total.
Barloworld has reviewed its current facilities, including committed and non-committed
facilities, as well as headroom on the existing domestic medium term note programme and
remains satisfied with the positive state of the headroom, gearing and liquidity.
Conclusion
The group will release a voluntary pre-close update closer to the six-month period ending 31
March 2025.
Shareholders are advised that the information in this voluntary trading update has not been
audited, reviewed, or reported on by the group's external auditors. This update does not
constitute a forecast.
Sandton
20 February 2025
Equity and Debt Sponsor:
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Enquiries:
Kgaugelo Legoabe-Kgomari
Tel: +27 82 619 4710 | E-mail: bawir@barloworld.com
Date: 20-02-2025 01:30:00
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