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10 May 2010 14:06
Barloworld pointed to a second-half rebound after a sharp fall in first-half earnings, saying it expects to benefit from a recovery in the economy and increased mining industry activity.
Barloworld, which leases and sells automobiles and earth-moving equipment, has been squeezed as the construction boom winds down from the 2010 Soccer World Cup, which starts on June 11.
But the company, which represents Caterpillar and other international companies in South Africa, is counting on better sales of new vehicles and an upswing in mining due to higher commodity prices.
“It was a pretty bad set of results but they’re signalling that things are going to be better and they are still declaring dividends,” said Mark Hodgson, an analyst at Avior Research.
The company was forced to it cut its interim dividend in half to 20 cents as it takes tight control of its cash.
“It’s been a tough first half but we have reasons to be more optimistic and positive about the second half,” Clive Thomson, Barloworld’s CEO, said in a phone interview.
The company is also betting it will benefit from the government’s plan to spend $136-billion to build roads, schools and hospitals over the next five years.
Headline earnings per share fell 95,4% to 40,7 cents for the six months to end-March. Headline earnings per share are the main gauge of profit in South Africa and strip out certain one-time and financial items.
Revenue fell 16% to R20,2-billion.
Barloworld said it expected its equipment unit to improve as orders rise for the first time in 18 months.
The auto unit, which overtook equipment as the main contributor to sales, increased revenue by 13%.
South Africa’s new vehicle sales have been rising since January as consumer demand slowly recovers following two years of sharp declines, while the Soccer World Cup is expected to boost demand for rental cars.—Reuters
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