Lower machine sales was bolstered by after-sales revenue, which was in line with the prior period. Operating profit from core trading activities trailed 9% behind the previous period. Picture: Supplied
Barloworld’s heavy equipment and consumer-focused operations traded in difficult environments in the 11 months to August 31, but performance was boosted by a government-led expansion of transport infrastructure in Mongolia as well as China’s demand for the country’s mineral resources.
Barloworld said in a trading statement yesterday that the South Africa mining industry had been under “immense pressure”, with limited scope to expand fleets.
In Russia, the group subsidiary Vostochnaya Technica (VT) continued to face a decline in revenue due to sanctions and the contraction of its addressable market.
Ingrain was starting to benefit from a turnaround plan for its starch and glucose operations that were instituted in the second quarter of the 2024 financial year.
For the 11-month period, group revenue fell 7.4% to R37.4 billion from R40.4bn, when compared to the 11 months ended August 31, 2023. EBITDA (earnings before interest, tax, depreciation and amortisation) declined by 14.3% from R4.9bn.
Net debt fell markedly to R3.5bn from R6.3bn after a focus on cash generation and debt reduction.
Equipment Southern Africa’s revenue ended 13% lower at R22.7bn, coming off the mining replacement cycle. Lower machine sales was bolstered by after-sales revenue, which was in line with the prior period. Operating profit from core trading activities trailed 9% behind the previous period.
Bartrac’s performance was flat over the prior period at R185 million. The firm order book ended lower at R2.4bn from R2.9bn.
At Equipment Eurasia, an earn-out provision of $10m would be paid for the acquisition of Barloworld Mongolia on September 1, 2020. The earn-out period would lapse on September 30, 2024.
VT’s revenue was impacted by the reduced product lines, supply chain constraints and the sanction regime. VT raised $30m in provisions related to inventory obsolescence and restructuring costs in the period.
Equipment Eurasia delivered $443.2m revenue which was 4.5% higher than the prior $424m, primarily due to 61% growth in Barloworld Mongolia’s revenue. VT’s revenue fell 25% to $207m.
Excluding the Mongolia earn-out and the VT provisions, Eurasia’s operating profit from core trading activities came to $89.1m.
Barloworld Mongolia’s prime product contribution to revenue increased to 46% from 32%, while the after-market sales contribution declined to 45% (prior period: 55%) of the total revenue mix.
The business generated EBITDA of $54.3m, well up from $35.5m. On a consolidated basis and after having regard to the Mongolia earn-out provision, Barloworld Mongolia’s operating profit margin from core trading activities decreased to 18.8% and 16.6% respectively.
VT revenue declined to $207m from $277.3m. Excluding the VT provision, EBITDA declined to $43.1m from $56.6m.
VT’s EBITDA dropped to $13m from $56.6m due to provisions, while operating profit from core trading activities fell to $9.9m from $53.1m. The business continued to trade above break-even and remained self-sufficient in terms of its funding requirements.
Barloworld earlier this month said it had started to investigate potential export control violations at VT and had engaged the services of independent firms to conduct this investigation on its behalf.
Ingrain generated revenue of R6bn. The South African consumer remained cash-strapped as high unemployment rates prevailed. Overall sales volumes declined 2.5%. The non-alcoholic beverage sector, including spray drying, showed pleasing growth.
Regional exports into southern Africa grew well, offset by lower volumes in the Deep Sea Markets due to supply chain constraints as a result of the ongoing Red Sea conflict. EBITDA, at R704m was down 4.1% when compared to the prior period.
BUSINESS REPORT
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