“Against a backdrop of challenging economic conditions and geopolitical uncertainty, the group produced a solid result for our 2014 financial year,” said Clive Thomson, chief executive of [DATA BAW:Barloworld LTD.]
The South African based industrials firm, specialising in the distribution of Caterpillar construction machinery, posted a four per cent rise in revenue from continuing operations to 62 billion rand for the year ended 30 September 2014.
Operating profit also increased by 16 per cent to 3.8 billion rand.
(READ MORE: Barloworld earnings boosted by automotive & logistics business)
Barloworld’s automotive and logistics division generated operating profit 24 per cent higher to 1.6 billion rand after making provisions for the exposure arising from the Ellerines business rescue.
“The Automotive and Logistics division traded strongly due to improved operating efficiency and disciplined cost control,” said Thomson.
Revenue generated from the logistics business amounted to 4.4 billion rand with operating profit of 122 million rand.
Supply chain management was however adversely impacted by the Ellerines contract, with Barloworld making a 76 million rand provision for the impairment of intangibles and other assets related to the contract.
(WATCH VIDEO: Digging deeper into Ellerines business rescue application)
Nevertheless, headline earnings per share from continuing operations increased by 10 per cent to 857 cents compared to the restated 780 cents in 2013 while a dividend of 320 cents was declared, 10 per cent higher than in 2013.
The group’s equipment business in Southern Africa posted a 9.3 per cent increase in revenue to 20.9 billion rand despite a slowdown in the mining sector, while its Russian division’s revenue fell by 23 per cent to 382.7 million euros as mining sales dropped.
Its handling division recorded a drop of 0.6 billion rand in revenue to 1.9 billion rand following the disposals of operations in Holland and Belgium. Operating profit however was slightly higher at 55 million rand.
(READ MORE: Barloworld disposes of Australian motor interests)
“Our Equipment business in southern Africa performed well notwithstanding weak commodity prices and reduced capital expenditure in the mining sector. The construction sector in Spain remained depressed and necessitated a further restructuring of our operations, while our Russian business delivered a pleasing result notwithstanding the uncertainties emanating from the Ukraine crisis,” explained Thomson.
In its motor retail Southern African operations, revenue grew by 9.8 per cent to 19.2 billion rand and operating profit up by 29 per cent to 542 million rand due to an increase in used retail and parts sales.
Avs Rent a Car’s revenue hiked up by 11 per cent to 4.5 billion rand while Avis Fleet Services’ revenue increased by 6.6 per cent to 3.1 billion rand.
“While a number of geopolitical risks and economic uncertainties exist globally, our focus will remain on executing our strategy, driving operational efficiencies and maintaining strong cash flows,” concluded Thomson.
“We expect to continue to make good progress into 2015 and are well placed to benefit once the infrastructure and mining cycles move into a recovery phase across our key geographies.”