Barloworld monitoring coronavirus


Barloworld monitoring coronavirus

Published Date: 2020-02-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

Barloworld monitoring coronavirus

Amid already weak macroeconomic and trading conditions, the group says there is concern over its negative impact on growth and commodity prices.

Barloworld says the coronavirus outbreak has started to weigh on global sentiment, with concerns over its negative impact on growth as well as commodity prices. As a supplier of earthmoving equipment such as Caterpillar trucks to the mining industry, amongst others, it says it's monitoring the developments closely and will react to mitigate any risks to its business.

Already, the group is feeling the effects of continued weak macroeconomic and trading conditions. In a first-quarter trading update, it reported a decline in group operating profit before charges linked to its empowerment deal. However, it said a steady performance at its equipment division contributed positively to its performance over the three months to end-December.

Like other JSE-listed company, it has adopted the new IFRS 16 accounting methodology, which it said positively impacted its operating performance. However, a higher interest charge affected net income in line with its expectations. It was also negatively affected by currency movements. The group has operations in the Democratic Republic of Congo (DRC) and Russia, amongst other geographies. It also recently acquired Mongolian-based Wagner Asia Equipment.

Over the period, it said overall equipment sales were down due to lower machine sales in the rest of Africa, particularly in Mozambique. The performance of its joint venture in the DRC declined due to reduced mining activity as a result of unfavourable cobalt prices. Equipment Russia's first-quarter revenues were in line with last year while operating profit showed some improvement, it said.

The group's automotive division was down on the previous period due to continued pressure on sales of new and used cars. The assets and liabilities of Avis Fleet remained held for sale and its results disclosed as a discontinued operation.

Meanwhile, it said the sale of its Middle East logistics operations was close to conclusion while the sale of waste management business SmartMatta had progressed. Turnaround initiatives for its remaining logistics business continued notwithstanding the headwinds faced in the transport and freight forwarding industry.

While working capital and related net debt levels increased over the first quarter, in line with previous years, it expected to reduce these levels over the remainder of the year.

Its shares declined 0.2% to R99.76 yesterday.

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