Heavy equipment manufacturer and distributor Bell Equipment says profit for the six months to the end of June increased 66% to R348m after strong demand in most markets.
The industrial group with operations across America, Africa, Europe and Australasia said though global markets and the group’s order book are strong, it is “sensitive to an increasing possibility of markets softening”, particularly in Europe.
Profit from operating activities rose 74% to R535.8m, with headline earnings per share (HEPS) increasing 64% to 343c.
However, it said load-shedding, the availability of vessel space for finished articulated dump trucks (ADT) products, and the funding required for the long working capital cycle to import components and material from the northern hemisphere continue to challenge the SA manufacturing operation.
Now the Richards Bay-based group is charging ahead with plans to produce more ADTs in its German facility which is positioned closer to suppliers and larger markets.
“This is part of a project to ensure the overall resilience and sustainability of the group,” Bell said in its latest interim results on Monday. “The critical need for simple logistics routes has been clearly demonstrated over the past few years.”
New and existing products less affected by these challenges would continue to be manufactured in the SA plant.
Bell Equipment — valued at R1.7bn on the JSE — manufactures, distributes and exports a wide range of heavy-duty equipment for the construction, mining, quarrying, sugar, forestry and waste-handling industries worldwide. The group boosts its offering with aftermarket products, including parts, service contracts, transport, extended warranties and rentals.
The bulk of Bell’s R4.5bn revenue was attributed to its European manufacturing, assembly, logistics and dealer sales operations which tallied R2.2bn, while improved sales in the North American market were also recorded.
The group said its board is completing an evaluation of the benefits of potential changes to the group’s operating structure.
The outcome of this will be reached before deciding on a new appointment to replace CEO Leon Goosen, who said in July he will leave the group at the end of December after five years in the top job.
“This process will be completed expeditiously so as not to compromise the company’s strategic positioning,” it said.
Bell said while it was enjoying strong demand for its offerings, it cautioned that it is “sensitive to an increasing possibility of markets softening”, forecasting that Europe could see some reduction in demand for ADTs as the Russia and Ukraine conflict potentially moves country-specific post-Covid-19 stimulus packages from infrastructure spending to military assets.
Additionally, it said the completion dates for some larger infrastructure projects in Europe have also been moved out, resulting in reduced demand for earthmoving equipment.
The group did not declare a dividend, instead allocating cash for targeted growth and inventory investment.
By midafternoon trade on Monday Bell Equipment’s share price was 0.81% lower at R18.39.
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