Heavy industrial and consumer equipment group Barloworld’s share price slumped 12.47% on Friday after it said it had voluntarily disclosed to US authorities about potential export control violations related to Russia.
An initial submission to the US Department of Commerce’s Bureau of Industry and Security (BIS) related to sales of certain goods to its Russian subsidiary, which the company was investigating, Barloworld said in a JSE regulatory notice on Friday.
Barloworld said it had engaged the services of independent firms with the necessary expertise in connection with the internal investigation and voluntary self disclosure. The share price closed at R81.17 on the JSE on Friday, just below the R83.42 that it was trading at the year before on the same day.
It said the precise details of whether there had been violations and, if so, the extent of those violations, had not yet been determined and remained subject to the conclusion of the investigation and the voluntary engagements with the BIS.
Further announcements would be made in due course, Barloworld directors added.
Barloworld supplies industrial and mining equipment and is the supplier of Caterpillar machinery in multiple African countries, as well as in Eurasia.
In the six months to March 31, Barloworld lifted its dividend 5% to 210 cents a share, despite an 8% decline in headline earnings a share to 532.2 cents. In its Equipment Eurasia division, Barloworld Mongolia’s growth was supported by commodity demand driving Equipment and Aftermarket sales.
The division had a firm order book book at March 2024, predominantly of Mongolia orders, amounting to $111m versus $109m at the same time a year before. The group said of its business in Russia, Vostochnaya Technica (VT), that they expected it would remain self-funding as the group continued to monitor activity in that territory.
VT’s earnings before interest tax depreciation and amortisation came to R417 million, a 16.1% decline compared to the prior interim period. Operating profit of R387m fell by 16.8% due to increased aftermarket activity revenue mix.
BUSINESS REPORT