The continued decline in Vostochnaya Technica’s trading activities due to the effect of sanctions on Russia continues to weigh on Barloworld’s earnings.
Barloworld said on Thursday that its headline earnings per share (HEPS) for the six months ended March were expected to be 18.9%-22.7% lower at 411.5c to 431.5c.
Earnings per share are expected to be 19.3% to 23.2% weaker year on year. The group expects to release its interim financial results on May 26.
In March, Barloworld advised that the contraction in its Equipment Southern Africa and its Russian unit VT due to the markedly lower activity levels were weighing on its first half.
Despite a “robust performance” from its Mongolia unit, Barloworld’s revenue declined 4.9% to R14.8bn in the first five months of the financial year compared with the previous year. Group earnings before interest, tax, depreciation and amortisation (ebitda) fell 12% to R1.6bn and operating profit from core trading activities declined by 20.5% to R1.1bn.
Equipment Southern Africa’s results reflected the slow recovery in the mining sector and the business disruption arising from the unrest in Mozambique, Barloworld said previously.
Not only is Barloworld facing a takeover bid by a consortium led by group CEO Dominic Sewela, it also under investigation by the US Bureau of Industry and Security for potential export control violations.
The heavy industrial and consumer equipment group alerted shareholders in September that it had filed an initial notification of voluntary self-disclosure with US authorities, in which it flagged possible export control violations at VT.
VT supplies the full range of CAT and other original equipment manufacturer (OEM) products, including surface earthmoving equipment, underground mining units, parts and after-sales support services.
In the light of the complexities involved, the Bureau of Industry and Security has granted an extension of the deadline for Barloworld to complete its investigation and submit a final narrative account of voluntary self-disclosure to June 2.
Barloworld was reviewing various options to preserve shareholder value in respect of its investment in VT, it has said.
With Kabelo Khumalo
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.