Barloworld operating profit up 32%

Barloworld, a leading industrial brand in South Africa, has announced an impressive 32% increase in operating profit. The company's shares surged over 6% in morning trade following the release of its financial results for the year ending in September. Dominic Sewela, the CEO of Barloworld, highlighted the strong performance of the equipment business in South Africa, which saw a remarkable growth of nearly 20%, reaching 21.8 billion rands in total revenue. During an interview with CNBC Africa, Sewela discussed the key drivers behind this success and the company's strategic outlook for the future. He emphasized the resilience of the business divisions, particularly in mining, contract mining, and construction, across various geographies including South Africa, Mongolia, and Russia. Despite the challenges posed by the war situation in Russia, Sewela expressed confidence in the overall performance of Barloworld's operations. One of the standout performers for Sewela was the grain business, which has shown significant growth in both volume and margin. Looking ahead to 2023, Sewela acknowledged the uncertainties posed by ongoing geopolitical tensions, particularly in Russia. However, he reassured stakeholders that the company is well-prepared to navigate the complex regulatory environment and maintain its financial stability. Sewela also highlighted the company's strategic shift towards prioritizing cash-generating businesses with strong margins and operational efficiency. This approach has enabled Barloworld to enhance its cash position and deliver solid returns to shareholders. The CEO attributed the decision to distribute dividends to the company's robust financial position, with a substantial cash reserve and manageable net debt. Sewela underscored Barloworld's ongoing transformation journey, which involves divesting from non-core, cash-intensive businesses and focusing on high-yielding sectors. When asked about potential acquisitions in the pipeline for 2023, Sewela emphasized the importance of prudent capital allocation and ensuring that any investment aligns with the company's core principles of value creation. He highlighted the significance of evaluating opportunities based on intrinsic value and market dynamics to drive sustainable growth and maximize shareholder returns. Sewela concluded by stating that Barloworld remains committed to delivering long-term value for its stakeholders through strategic decision-making and prudent financial management.