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Voluntary operational trading update: three months ended 31 December 2019
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Income Tax Registration number 9000/051/71/5)
(Share code: BAW)
(JSE ISIN: ZAE000026639)
(Share code: BAWP)
(JSE ISIN: ZAE000026647)
(Namibian Stock Exchange share code: BWL)
(Alpha code: BIBAW)
("Barloworld" or the "Company" or the "group")
VOLUNTARY OPERATIONAL TRADING UPDATE: THREE MONTHS ENDED 31 DECEMBER 2019
Group overview
Group revenue for the period was lower than the prior year as a result of continued weak macroeconomic
and trading conditions. Group operating profit before BEE charges was down, while the steady
performance of the equipment divisions contributed positively to performance.
The adoption of IFRS16 positively impacted the operating performance, however, the higher interest
charge resulted in a net adverse impact on attributable income in line with our expectations. Currency
movements also negatively impacted the fair value adjustments on financial instruments.
Divisional performance overview
Equipment
Overall sales were down on the prior year due to lower machine sales in the rest of Africa, particularly in
Mozambique, where the 2019 performance was bolstered by the delivery of the balance of a machine
package deal. Aftermarket revenue ended higher than the comparative period driven by continued focus
on growing Service activity. Despite the lower sales, operating profit margins have improved from last year
driven by increased parts activity and cost containment efforts. The firm order book at the end of December
2019 remains strong.
As previously guided, the performance of Barloworld's joint venture in the Katanga province of the
Democratic Republic of Congo was down on the prior year, impacted by reduced mining activity levels as
well as unfavorable cobalt prices.
Equipment Russia's first quarter revenues were in line with the prior year while the operating profit
showed some improvement. This was driven mainly by strong mining sales with good margin realisation
in both new machine and aftermarket sales. The firm order book to December 2019 remains strong
supported by the region’s mining sector.
Automotive
Automotive trading was down on the prior year due to continued pressure on new and used unit sales.
The newly acquired BMW Centurion dealership was integrated and contributed positively to performance.
Car rental increased rental days. However, this was offset by pressure on rental rates. Used vehicle
margins improved, despite lower used vehicle volumes.
The assets and liabilities of Avis Fleet remain held for sale and its results disclosed in a discontinued
operation. The operating performance was down against the prior year but favourably impacted by
improved used car sales and margins.
Logistics
Non-renewal of contracts in the prior year and increased fleet costs impacted results. Turnaround
initiatives continue notwithstanding the headwinds faced particularly in the transport and freight
forwarding industry. The sale of the Middle East operation is close to conclusion, while the sale
Smartmatta has progressed. Further guidance on both transactions will be given in due course.
Funding
In line with previous years, group working capital and related net debt levels have increased in the first
quarter but we are expecting to reduce these levels over the balance of the 2020 financial year.
Conclusion
The global concern over the corona virus outbreak is weighing on general sentiment, with concerns over
its negative impact on global growth as well as commodity prices. We are monitoring the developments
closely and will react to mitigate the risks on our business should this be required.
Shareholders are advised that the information relating to 2020 performance has not been audited,
reviewed or reported on by the Company's auditors. This update does not constitute a forecast.
Sandton
12 February 2020
Sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Enquiries: Barloworld Limited Investor Relations
Tel: +27 11 445 1000
E-mail: invest@barloworld.com
Date: 12-02-2020 12:30:00
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