Industrial group Barloworld expects to report lower annual earnings amid a decline in trading activities in its Russian unit Vostochnaya Technica (VT) and lower demand across some Southern African markets.
The group said on Tuesday that its headline earnings per share (HEPS) for the year ended September were expected to be 20.3% to 22.3% lower, in a range of 794.5c to 814.5c.
The group is being bought out by a consortium led by CEO Dominic Sewela. The consortium consists primarily of two major stakeholders: Gulf Falcon, a subsidiary of Saudi Arabia’s Zahid Group; and Entsha, an SA company linked to Sewela.
Once the transaction is complete, the group will be delisted from the JSE.
In September Barloworld flagged weaker earnings for the 11 months ended August, as revenue and operating profit came under pressure, largely due to challenging market conditions and as revenue from the Russian business halved.
In September, Barloworld completed an internal investigation and submitted a final report on the review of export control compliance issues, specifically involving its sales to its Russian subsidiary.
The group said it had not identified any US sanction violations in its dealings with Russia. It did, however, identify apparent violations of US export controls, which the company “takes seriously and is addressing”.
Barloworld had a deadline of September 2 to complete its investigation and submit a final narrative account of voluntary self-disclosure of apparent US export control violations to the US department of commerce’s bureau of industry and security.
The investigation, launched in September 2024, focused on potential export control breaches by VT and was conducted by an independent forensic firm under the guidance of US legal counsel.
VT, Barloworld’s Russian equipment distribution business headquartered in Novosibirsk, has been affected by international sanctions and the Russia-Ukraine conflict, resulting in a fall in revenue and a shrinking market.
The company said it expected to release its annual results on November 17.
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