South African industrial brands group Barloworld on Wednesday reported a 5% increase in headline earnings per share to 893,6 cents for the year ended September 30, from 853,2 cents a year ago. On a fully diluted basis, headline earnings per share were 873,6 cents from 833 cents previously.
The group’s dividend totalled 455 cents — up 20% from 380 cents a year ago.
The I-Net Bridge consensus forecast was for headline earnings per share of 900 cents and a dividend of 420 cents per share.
The group’s net profit was up 23% to R2,176-billion, while operating profit before goodwill and amortisation was up 17% to R3,48-billion. Cash flows from operations remained strong at R3,6-billion from R3,2-billion in 2004.
“Since the introduction of value-based management six years ago, we have grown headline earnings per share at a compound growth rate of 20% per annum. In 2002, we set ourselves the goal of doubling the value of the company in four years and we are well on track to achieving it,” CEO Tony Phillips said.
The group reported a strong performance from the cement and lime business, record new motor-vehicle sales and a solid result from the coatings business, and the company took full advantage of the strong trading conditions in most of Southern Africa.
The results also included a full year’s contribution from 100% of Avis for the first time.
The equipment business increased profits with tighter controls and lower fair-value adjustments on financial instruments. However, the international operations experienced mixed fortunes, with the Iberian equipment business continuing to generate high returns as it benefited from ongoing public-infrastructure investment.
Continued management focus to bring underperforming operations to acceptable returns produced improvements in the United States industrial distribution businesses. Truck Center made a positive contribution to profits for the year. A full strategic review of all businesses was conducted within scientific and restructuring costs of R29-million were incurred.
In Australia, improved performance from the motor business contrasted with difficult trading conditions in coatings.
During the year, Barloworld acquired the Hyster lift-truck dealership in Northern Ireland and Hamilton Brush in South Africa. Prostart (automotive refinish coatings) and Midas Paints have also been acquired, subject to regulatory approvals. The shareholding in Pretoria Portland Cement (PPC) was increased slightly to 71,7%.
Barloworld was also awarded the Budget car-rental licence in Sweden, and, subsequent to year-end, acquired the Avis and Budget car-rental businesses in Denmark.
Its existing Siberian equipment dealership was merged with a neighbouring dealer and the joint venture was granted an expanded territory by Caterpillar. It also increased its shareholding in pan-European Caterpillar power solutions and temperature-control rental company Energyst BV to 22,3%.
During the review period, 25% of Logistics Africa was sold to a black economic empowerment consortium, as well as the 33% holding in Slagment held through PPC.
Looking ahead, Barloworld said South Africa appears set on a course of strong economic growth, backed by increasing business confidence, sound fiscal policies and a willingness by the government to increase infrastructure spending.
“Our Southern African businesses are well positioned to take advantage of the organic growth opportunities that should present themselves under this positive growth scenario.”
“Our Iberian Caterpillar business is operating in a mature construction environment, but we continue to look for new sources of revenue. Our management initiatives are set to generate an improved contribution from our industrial distribution and scientific businesses which operate primarily in Europe and the United States,” the company said.
“In the year ahead, we plan to capitalise on the continuing strength of the South African economy and to generate improved results from our international operations. We will continue to focus on further improving our returns and growing profits throughout the businesses,” Phillips said. — I-Net Bridge