South African global brands management group Barloworld had an excellent year to the end of September, and CEO Tony Phillips is equally upbeat about future prospects.
“The future outlook is positive and we are well on track to achieve our medium-term goal of doubling the value of the company in the four years to September 2006,” Phillips said on Wednesday.
Underpinning the 45% surge in Barloworld’s earnings in the year to September was a strong operating performance in all aspects of its businesses.
There were solid performances from almost all of the group’s operations in South Africa and internationally.
Revenue was up 6% to R36,67-billion, while operating profit grew 21% to R2,836-billion.
Southern Africa contributed 75% of operating profits — up from 69% in 2003.
Headline earnings per share were up 45% to 857 cents for the year.
Among the highlights of the year were the integration of Avis, which Phillips said is “on track”, and the expansion of Russian Caterpillar territory to an area larger than the United States.
Cement and equipment remain the engine room of Barloworld’s profits, but Phillips noted there was an upturn in the Melles Griot and Industrial Distribution divisions.
Finance director Clive Thomson said that 13 new or revised international financial reporting standards had been adopted during the year, but these had no impact on headline earnings per share (Heps).
However, due to the strength of the rand, which appreciated 18% in 2004 against the dollar, the translation of offshore profits impacted Heps by 19 cents. The rand’s appreciation against the euro and British pounds — the main currencies in which Barloworld operates — at 7% and 8% respectively was more muted, he said.
Turning to the operational performance, Phillips said that Spain continued to deliver and that conditions there remain extremely strong. In Africa, demand was mixed with construction strong, but mining under pressure.
Operating profits in constant currency terms in the rest of the world were in line with the previous year.
The Iberian Equipment business, which has been a substantial source of profits for the past five years, continued to make a strong contribution.
The Industrial Distribution and Scientific operations showed good progress towards achieving acceptable returns.
Avis in Scandinavia did well — in contrast to a disappointing result from Australian Motor dealerships and lower profits from Coatings in Australia.
The Equipment division’s order book remains strong, he said.
Philips said the group is on track for continued growth, and in 2005 it will continue to focus on growing profits and returns in all its businesses.
“… Supported by modestly favourable economic conditions in the territories in which we operate, we look forward to being able to report another year of progress,” he said.
“We are prisoners to economic conditions, but our reading is that in the countries in which we operate, these are fair,” he said. — I-Net Bridge