Barloworld to shed more jobs due to Covid-19


Barloworld to shed more jobs due to Covid-19

Published Date: 2020-07-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Barloworld to shed more jobs due to Covid-19

The industrial group is cutting costs after reporting a first-half loss as it impaired its operations by R1.7 billion.

Barloworld has reported a first-half loss after writing down the value of its businesses because of Covid-19. The industrial group now plans to continue reducing its workforce and cutting other costs so it can preserve cash and position its business for the longer term.

The low business confidence and constrained consumer demand experienced last year continued into the first six months of the group's new financial year, with the onset of the pandemic starting to impact trading in March due to lockdown conditions and trade and travel restrictions that affected tourism, supply chains and put pressure on commodity prices. Barloworld is a reseller of Caterpillar earthmoving equipment in Africa and Russia. It also operates logistics, fleet management and car rental businesses in a number of countries, exposing it to different affected sectors.

Revenue fell 12% to R25.2 billion in the six months to end-March, cushioned by a strong performance from its Equipment Russia business. Operating profit declined by 28% to R1.1 billion, with its operating margin declining to 4.4% from 5.5%. It reported a basic loss per share of 729.7c, down from earnings of 438.1c previously, while headline earnings per share (HEPS) fell 44% to 268.4c. Normalised HEPS came in 32% lower at 354c. It hasn't declared an interim dividend and says it's unlikely that it will pay one for the full year either.

The group recognised impairments within its Rent a Car southern Africa operations, as well as a number of its equipment businesses across the region. The impairments of R1.7 billion impacted earnings but were excluded from headline earnings. The normalised results make allowances for the cost of a black economic empowerment deal.

It said austerity measures implemented to offset the impact of Covid-19 were expected to reduce expenses by up to R720 million this year, excluding the cost of implementing the measures. It has already retrenched workers, deferred non-essential capital expenditure and reduced operating costs. The retrenchment process, including early retirement, was expected to cost between R300 million and R320 million, resulting in a headcount reduction of about 20-25% of its workforce. Its Automotive and Logistics businesses were most affected, particularly Car Rental.

Barloworld said its strong balance sheet would provide support, with available committed funding capacity of 8.1 billion.

Its shares fell 12% to R69 yesterday.

Similar Stories