29 Jan 2009 11:40
INTERIM MANAGEMENT STATEMENT
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Share code: BAW)
(ISIN: ZAE000026639)
("Barloworld or the Company")
In line with the Company's Outlook Statement of November 2008, we wish to issue a Trading Update as follows:
The equipment division in southern Africa continues to experience ongoing demand in the mining sector, driven mainly by a strong performance in coal and iron ore, as well as the delivery of back orders, despite some projects being deferred. Construction demand relating to infrastructure projects is expected to remain strong in the period leading up to 2010. The power systems business continues to show growth and is well placed to respond to any increase in demand. Overall, trading results in the first quarter were well ahead of last year. However activity levels are expected to slow over the balance of the year.
In Iberia, the Spanish economy continues to deteriorate. The banking sector remains risk averse, and the measures announced by the Government to stimulate the economy are only expected to impact business in late 2009 and 2010. Consequently trading has been negatively impacted and revenue was 35% down in the first quarter. Significant restructuring and cost reduction plans have been initiated which should start to have a positive impact in the second half.
In Siberia first quarter trading was ahead of last year assisted by the delivery of back orders. The slowdown in mining spend and delays on infrastructure projects will reduce activity levels in the months ahead.
The motor retail business in southern Africa is holding its own in a slowing market with first quarter results largely in line with the prior year. New vehicle sales will remain under pressure for 2009. We expect a continuing improvement in used vehicle profit contribution. The Australian market has experienced a slowdown in vehicle sales over the past three months. The Avis Rent a Car operations in southern Africa are experiencing a decline in rental days partly countered by improved fleet utilisation. The fleet services business continues to perform well. The process of disposing of the Scandinavian car rental operations is progressing according to plan but is at an early stage.
The South African handling operations continue to show satisfactory growth and the agriculture business in South Africa remains strong. Trading conditions have deteriorated further in the USA and the UK and Europe is also significantly down. Improvements in the markets are not expected before late 2009. Measures have been taken to reduce costs and improve efficiency in all businesses.
In the African logistics business trading in the first quarter is ahead of the prior year. The prevailing economic conditions in Europe and the Middle East are translating into lower levels of activity for the international logistics operations, and this is expected to continue throughout 2009.
Post the year end further improvements were made to the company's debt profile. A seven year bond was issued on the South African market which raised R750 million at a fixed interest rate of 11.67% per annum. The proceeds were received on 2 October 2008 and were utilised to repay short term debt. Subsequently a R700 million, five year loan facility was concluded with a South African bank.
The global economic environment continues to deteriorate and trading conditions will be difficult in most of the Barloworld markets and geographies in 2009. We are taking the necessary steps to cut expenses, reduce capital expenditure and optimise working capital.
This financial information has not been reviewed or reported on by Barloworld's auditors.
Barloworld Limited expects to announce its half year results for the year to 30 March 2009 on 11 May 2009.
Sandton
29 January 2009
About Barloworld Limited
Barloworld Limited (LSE: BWO) 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, Mercedes, Chrysler, BMW, General Motors, Ford, Toyota, Volkswagen, Audi, Volvo and others. Barloworld has a proven track record of effectively managing long-term relationships with global principals and customers. The company was founded in 1902 and currently has operations in 42 countries around the world with approximately 20 000 employees. For more information visit
| 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 |
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