Takeover target Barloworld said its revenue for the four months to January 2025 increased 1% as its Mongolia operation continues to be a strong pillar in the group’s arsenal.
The company on Thursday said Barloworld Mongolia delivered revenue growth of 80% relative to the prior period, supported by prime product sales and aftermarket demand.
“The pressure of the compressed Southern African trading environment was absorbed by the expansionary environment in Mongolia, which continues to grow driven by the government-led expansion of transport infrastructure and external demand for its minerals and resources, primarily from China,” Barloworld said.
“Excluding gold and copper driven economies which delivered relatively stronger performance, the Southern African mining sector has remained somewhat constrained on the back of softer commodity prices,” the company said.
The group said it had reviewed its current facilities, including committed and noncommitted facilities, as well as headroom on the existing domestic medium-term note programme and “remains satisfied with the positive state of the headroom, gearing and liquidity”.
Ratings agency Moody’s last week upgraded Barloworld’s creditworthiness, saying the company would be able to maintain adequate credit metrics despite a downturn in the commodity cycle, “which has caused a decline in demand for heavy equipment in its main market of Southern Africa”.
Moody’s assigned a stable outlook to the industrial stalwart, saying it reflected its outlook on SA’s sovereign rating, where the company generates most of its revenue and cash flow.
“The stable outlook also reflects our expectation that Barloworld will maintain adequate credit metrics through the commodity cycle and the potential acquisition and delisting of Barloworld transaction,” it said, referring to a bid launched by a consortium led by group CEO Dominic Sewela.
US earthmoving equipment manufacturer Caterpillar, a key supplier for Barloworld, has also come out in support of the bid to take the group private in a deal that values the group at R23bn.
Barloworld said mining activity remained challenging, affecting the group’s bottom line.
“Despite the challenging mining activity, overall machine sales revenue was in line with the prior period and the business delivered growth in rental revenue, however, after-sales activity in parts and services was lower than the prior period.
“As a result, overall revenue declined by 4.7% compared with the prior period. Cost discipline and margin realisation resulted in a stronger operating profit margin compared with the prior period,” it said.
“Bartrac, the joint venture in the Democratic Republic of Congo, which continues to operate under difficult trading conditions, delivered a positive share of profit, which was however lower than the prior period.”
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