Heavy industrial and mining equipment company, Barloworld, has raised dividends to 310 cents per share for the full year to 30 September, marking a slight increase from the previous financial year’s 300 cents per share.
This comes amid a tumultuous financial landscape for the group where Barloworld faced a 21% decline in group headline earnings per share (HEPS) and a 6.9% dip in revenue.
Although Barloworld lowered gross debt by 29% to R7.9 billion as at the end of the period under review, operating profit from core trading activities was lower by 12.6% at R3.8bn.
Shares in Barloworld traded 0.87% weaker in the afternoon trade on the JSE yesterday.
This was after HEPS from operations for the period fell by by 21% to 1 022 cents while revenues for the period were also lower by 6.9% at R41.9bn.
Barloworld Group CEO, Dominic Sewela, said “a myriad of challenging and complex factors affected our trading environment” in the 2024 financial year.
Sewela said these included inflationary pressures, high interest rates, extreme weather events, and rising geopolitical tension spilling into escalating trade tensions.
“The confluence of these events resulted in a volatile and generally weak trading environment, heightened cyclicality and deeper geoeconomic fragmentation,” he said.
“Despite these challenging conditions, the group demonstrated exceptional resilience, and managed to navigate the environment effectively by pulling on levers that are within our control, exercising focused strategy execution and disciplined capital allocation.”
Barloworld had opted to restructure its operations at Ingrain and realigned operating costs to match current levels of activity under its equipment operations for Southern Africa. Nonetheless, the “potential violation of export control regulations in Russia” clouded the company’s financial performance.
Sewela attributed the dip in revenues for the period to subdued trading results from its equipment southern Africa segment, which recorded a 12.7% decrease in revenue. There was also reduced activity from the company’s Vostochnaya Technica (VT) division when compared to the previous financial year.
However, Barloworld Mongolia’s performance “was exceptional” with a revenue growth of 66%, which augmented the decrease in other territories.
“Ingrain’s performance was in line with the prior year’s performance. It was pleasing see our geographic diversification strategy at work, decreasing the impact of cyclicality,” explained Sewela.
In the outlook, Barloworld sees geopolitical risk overtaking inflation as the primary risk factor.
The International Monetary Fund expects global growth to be stable yet underwhelming, with moderation emanating from the United States, China and India while La Niña is also anticipated to influence global weather patterns next year.
“This suggests continued cyclicality and soft commodity markets. We expect consumer and business confidence to be boosted by lower global headline inflation and the ensuing monetary policy easing,” said the company.
In South Africa, Barloworld expects trading conditions to improve, driven by a revival in consumer and business sentiment stemming from the lower interest rate environment, the Government of National Unity, and progress made in reforming the electricity and logistics sectors.
BUSINESS REPORT