Barloworld says it is on track to meet the deadline for its internal investigation into whether it broke US sanctions in its dealings with Russia.
In a voluntary statement on Friday the company confirmed it would submit its report by the September 2 deadline, and that nothing untoward had yet been discovered.
The probe, launched in September 2024, focuses on potential export control breaches by Barloworld’s Russian subsidiary, Vostochnaya Technica, and is being conducted by an independent forensic firm under the guidance of US legal counsel.
Vostochnaya Technica, Barloworld’s Russian equipment distribution business headquartered in Novosibirsk, has been affected by international sanctions and the ongoing Russia-Ukraine conflict, resulting in a fall in revenue and a shrinking market. Still, the business is expected to trade near break-even levels.
The Russian business supplies construction, mining, power equipment and technical support countrywide through 17 divisions, seven service centres and 17 parts warehouses.
Since the onset of sanctions, Vostochnaya Technica’s revenue has plunged — falling about 37% to $68.9m (R1.23bn) in the six months to end-March, while its earnings before interest, tax, depreciation, and amortisation (ebitda) dropped 68%, due to operational pressure.
In response to the shrinking market and supply constraints, the Barloworld subsidiary has been scaling back operations by closing small autonomous divisions and reducing staff across multiple Russian cities, including Moscow, Yakutsk, and Petropavlovsk-Kamchatsky.
The company has focused on parts sales, which are largely exempt from US export controls, allowing Vostochnaya Technica to aim for break-even trading levels amid the challenging market conditions.
The investigation comes as Barloworld is amid a proposed buyout led by CEO Dominic Sewela and Saudi Arabia’s Zahid Group that could result in the company being delisted from the JSE.
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