Barloworld eyes Mongolian Caterpillar dealer


Barloworld eyes Mongolian Caterpillar dealer

Published Date: 2019-05-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

Barloworld eyes Mongolian Caterpillar dealer

The group has raised its interim dividend after a strong result from its southern Africa equipment business.

Barloworld is in talks to buy Wagner Asia Group, a Mongolian-based equipment dealer, as it looks for new growth opportunities. Wagner is the official dealer for Caterpillar in Mongolia and the acquisition would complement its other dealerships that sell the big yellow earthmoving trucks in the region.

It didn't disclose a price for the acquisition but said it planned to utilise its strong balance sheet for the deal.

Reporting interims results, Barloworld said its Equipment Russia business generated strong results for the six months to end-March - although both revenue and operating profit declined due to the inclusion of large-package mining machine deals in its 2018 results which weren't repeated in its current numbers. Equipment southern Africa grew revenue by 15.7% to R10 billion and operating profit rose 9.8% to R806 million. Its operating margin reduced to 8% from 8.5% due to increased machine sales. Income from associates grew 10.9% to R119 million, driven by growth of close to 21% in operating profit from its Bartrac joint venture in the Democratic Republic of Congo.

It said its Automotive division delivered a good operating performance in a weak local market, with operating profit slightly up on last year as its operating margin improved to 6.2% from 5.7%. Revenue was down, though, due to a change in revenue recognition for Mercedes-Benz cars in the prior period. Revenue from Logistics fell 3.3% to R2.9 billion due to reduced turnover in Supply Chain Management after it decided to close its KLL Distributors business.

Group revenue for the period declined by 1.6% to R30.4 billion while operating profit fell 4% to R1.88 billion due to the once-off costs of a recent empowerment deal and a UK pension scheme charge. It grew headline earnings per share (HEPS) by 4.1% to 476c. Normalised HEPS, which exclude the additional charges, rose 14.1% to 521.4c. It's raised its interim dividend by 13.8% to 165c per share.

Its shares rose 1.8% to R128.75 yesterday.

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