Barloworld flagged weaker earnings for the 11 months ended August, as revenue and operating profit came under pressure, largely due to challenging market conditions and as revenue from the Russian business halved.
In a voluntary trading update on Thursday, the industrial equipment and consumer goods company said group revenue was expected to decrease by 10% to R33.6bn from a year earlier. Earnings before interest, tax, depreciation and amortisation (ebitda) fell 9% to R3.8bn, while the ebitda margin rose slightly to 11.2% from 11.1%.
The industrial equipment and services division reported a 3.9% fall in revenue to R21.8bn. Ebitda for the segment fell to R2.3bn, resulting in an Ebitda margin of 10.7% from 11.8% in the prior period.
Barloworld Mongolia posted an 8.5% fall in revenue to $216m, largely due to the delivery of a large order of new machines in the prior period.
However, revenue at its Russian unit Vostochnaya Technica (VT) slumped by 54% to $95.2m and ebitda fell 22.5% to $10.1m.
The reported revenue of the consumer industries unit, which includes its Ingrain division — a manufacturer and supplier of starch and glucose, fell 2.1% to R5.8bn due to lower volumes and increasing competition from imports, the company said.
Despite operational pressures, Barloworld said its balance sheet remained strong. Net debt increased to R5.4bn, but the group said liquidity remained sufficient across both offshore and onshore operations, and it “remains well within its financial covenants”.
The company said it expected to release its annual results on November 17.
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