Bell Equipment, a designer, manufacturer and distributor of heavy industrial machinery, has flagged that its profit for the year to end-December is expected to fall by at least a quarter.
Headline earnings per share (HEPS) are expected to be at least 25% lower than the 798c reported in the prior period, the group said in an update on Friday, citing the effect of weak market conditions on production volumes and sales.
Bell operates in a cyclical business environment and has for the past few years benefited from strong post-Covid global market demand. However, there have been signs of global markets cooling off.
It had warned at the half-year mark that its key markets had significantly declined and predicted that the second half of the year would be more difficult than the first.
“The expected decrease in earnings for the year ending December 31 2024 is mainly due to these weaker conditions in most of the markets that the group is active in,” Bell Equipment said. “This has had a negative impact on production volumes and sales performance, as reflected in the sales reports for the third quarter to September 30 of the current fiscal year.”
Bell’s share price slipped as much as 7.8% in intraday trade on Friday before recovering to end the day 4.55% weaker at R42, its biggest one-day fall in about two weeks. The share price is still up 82% in the year to date.
With 112 independent dealers globally and 22 Bell-owned branches in SA, the R4.2bn market cap industrial manufacturer has two manufacturing facilities — in Richards Bay and Eisenach-Kindel, Germany — to serve the southern and northern hemisphere markets.
The Bell family, which holds about 70% of the company via an investment outfit called IA Bell, recently offered minorities R53 cash per share in its latest bid to take the group private. But the Richards Bay-based company saw its founding family’s latest bid fail after they could not achieve enough shareholder support.
Business Day previously reported that CEO Ashley Bell had outlined the company’s aims to grow the business organically by investing in the ongoing development and enhancement of Bell original equipment manufacturer (OEM) products, increasing market share in key markets, and growing the BHI contract manufacturing business in Richards Bay.
Subsequently, the group has been ramping up production of its flagship trucks away from SA towards manufacturing in its German factory. It said this would increase efficiencies as the product would be closer to its main market while freeing up space in the SA factory to manufacture new product ranges.
The strategic initiative to increase its ADT manufacturing capabilities at the German factory and decrease working capital investment has been reportedly progressing steadily but is set to take three to four years to complete.
Bell said a further trading statement would be released once it had more certainty regarding the extent of the expected decrease in its results for the year ending December 31.
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