28 Jan 2010 10:50
Barloworld Limited
("Barloworld or the Company")
Trading update
In line with lower activity levels in the mining and construction sectors, first quarter trading results for the southern African equipment division are well down on last year. Construction activity is being affected by the deferral and in some cases the postponement of projects. However, we do expect a commodity led recovery in mining in the last quarter of 2010.
Maintaining after sales support for the large active Caterpillar machine population will remain a focus for the year.
The Spanish economy remains weak with little sign of recovery expected before the end of 2010. The government continues to defer major projects although there has been some public expenditure at a local level. As a consequence activity levels in the first financial quarter are below last year and further restructuring and cost reduction actions have been taken. These are expected to bear fruit in the latter part of 2010.
In Siberia, first financial quarter trading was down on last year due mainly to the slowdown in mining spend and delays on infrastructure projects. However, there are improving signs following rises in commodity prices.
The automotive business is trading ahead of the prior year in the first financial quarter. The motor retail operations experienced a significant improvement in used vehicle profitability, while new car sales are showing some sign of recovery. Car rental rates remain under pressure, while utilisation continues to be well managed. The car rental business is expected to benefit from increased activity levels in the second half of the year, from the 2010 World Cup. The Australian operations continue to show positive growth. The fleet services business is performing well.
All of our handling businesses continued to experience difficult trading conditions in the first financial quarter with activity levels below last year.
Though restructuring has successfully reduced the cost base, weak new equipment sales and margin pressure continue to undermine profitability. Order books in Europe and South Africa are growing slowly and improved sales are expected later in 2010. Agriculture has faced reduced new equipment sales and margins but both are expected to improve later this year.
In the southern African logistics business profitability in the first quarter is holding up. In Europe, margins have been affected and the Middle East and Asia has seen lower volumes and margin squeezes.
The UK syndicated facility of £80 million was renewed last year for a further 3 years. In South Africa, the short-term commercial paper market remains liquid with spreads narrowing. The company's long-term debt and borrowing facilities remain sufficient to fund forecast future requirements.
2010 is proving to be another challenging year. The global economic environment appears to have stabilised with the expected uptick in commodities and trading conditions in most of the Barloworld markets and geographies anticipated in the latter part of 2010. We will continue to focus on generating positive cash flows, reducing capital expenditure, cutting expenses and optimising working capital. Skills retention and skills development remain a strategic priority.
About Barloworld
Barloworld is a distributor of leading international brands providing integrated rental, fleet management, product support and logistics solutions. The core divisions of the group comprise Equipment (earthmoving and power systems), Automotive (car rental, fleet services and motor trading), Handling (forklift truck distribution and fleet management) and Logistics (logistics management and supply chain optimisation).
We offer flexible, value adding, integrated business solutions to our customers backed by leading global brands.
The brands we represent on behalf of our principals include Caterpillar, Hyster, Avis, Budget, Audi, BMW, Ford, General Motors, Mercedes-Benz, Toyota, Volkswagen and others.
Barloworld has a proven track record of effectively managing long-term relationships with global principals and customers. We have an ability to develop and grow businesses in multiple geographies including challenging territories with high growth prospects. One of our core competencies is an ability to leverage systems and best practices across our chosen business segments. As an organisation we are committed to play a leading role in empowerment, transformation and sustainable development.
The company was founded in 1902 and currently has operations in 41 countries around the world with more than half of our 19,000 employees in South Africa.
28 January 2010
| Sandton | Sponsor: |
| 28 January 2010 | J.P. Morgan Equities Ltd. |
ENQURIES:
| Barloworld Limited Sibani Mngomezulu, Head of Investor Relations | +27(0)11 445 1000 invest@barloworld.com |
| Jacey De Gidts | +27(0)11 445 1000 invest@barloworld.com |
| Rebecca Morgan | +27(0)11 445 1000 invest@barloworld.com |
| College Hill Jacques de Bie | +27(0)11 447 3030 |