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Barloworld Ltd (ticker: BAW, exchange: )
News Release -
20-May-2003
Strong operational performance from BarloworldInternational industrial brand management company Barloworld Limited delivered a strong performance at the operating level for the half-year to March 31, 2003, although earnings were affected by the strength of the Rand.
Operating profits surged 41 percent to R1 171-million from R832-million in the first half of last year despite virtually unchanged revenues of R17,9-billion. The operating margin moved up from 4,7 percent to 6,5 percent.
"The underlying business is in excellent health," says Barloworld Chief Executive Officer Tony Phillips. "Cash flows are strong, margins are sound and we are well positioned to weather the difficult economic conditions pertaining in global markets." Cash generated from operations was R567-million.
The appreciation of the Rand against the US dollar resulted in a charge of R313-million (2002: R36-million gain) from marking-to-market financial instruments taken out to cover exposure to foreign currency denominated imports. This charge hit headline earnings per share, which declined by 22 percent to 211 cents per share (2002: 270 cents). In addition, the company calculates approximately 23 cents a share of earnings were lost in the translation of profits from its non-South African businesses based on the effect of a stronger Rand.
An unchanged interim dividend of 90 cents per share has been declared.
Reviewing the half year, Phillips said the relative strength of the South African economy saw a profit improvement in the cement and lime and coatings divisions. However, the Rand's strength affected the capital equipment business and interest rates, which remained at high levels, were responsible for a 5% reduction in demand for motor vehicles.
While there was little sign of a recovery in the United States, the company's industrial distribution business there improved its performance and the scientific business was able to reduce losses. The Spanish and Australian economies remained strong, but the United Kingdom showed signs of a manufacturing slowdown towards the end of the period.
Operational highlights included winning all three major equipment contracts for the Coega harbour project in the Eastern Cape, South Africa, and the continued success of the UK Ministry of Defence materials handling equipment contracts.
"This operational performance is further proof that our strategy to improve the quality of our business through Value Based Management is paying off," said Phillips.
Despite the stronger Rand, the profit contributions from Barloworld operations outside South Africa rose from 52 percent to 58 percent of the total.
Acquisitions during the period included an additional Freightliner truck dealership in Arkansas, additional shares in PPC and Avis, and Unilift, a UK-materials handling company. Subsequent to the end of the period under review, the motor leasing business in South Africa was disposed of for R877-million to Wesbank.
Looking ahead, Phillips says that Barloworld is "well prepared to navigate through what looks to be a period of uncertainty for global businesses, and to cope with the volatility and direction of the Rand. We're ready to take advantage of any improvement in trading conditions."
For further information contact Mark Drewell, Head of Corporate Communication at Barloworld on +27 11 445 1204, email: mdrewell@barloworld.com |
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Barloworld Ltd
