Press releases

Strategy execution yields solid results for Barloworld despite operating environment challenges

23 May 2022

Strategy execution yields solid results for Barloworld despite operating environment challenges

Strong performance driven by proactive management and improved trading activities across all core businesses

Key financial highlights:

  • Revenue from continuing operations of R18.4 billion, up 13.6%
  • Group operating profit improved 34.7% to R2.8 billion
  • Group operating margin of 12.2% (1H21: 7.3%)
  • Group EBITDA margin of 17.2% (1H21: 12.5%)
  • Group HEPS of 756 cents (1H21: 362 cents)
  • Improved group ROIC of 14.1% (1H21: 3.8%)
  • Interim ordinary dividend of 165 cents per share declared for the six months ended 31 March 2022, and the six-monthly portion of the 6% cumulative non-redeemable preference shares will be paid.

Johannesburg – Barloworld Limited today announced a strong set of results for the first six months of the 2022 financial year, benefitting from the robust performance of Equipment southern Africa, the resilience of Equipment Eurasia and Ingrain businesses, and exceptional results from the car rental and leasing business.

Commenting on the results, Group chief executive officer Dominic Sewela said: “This strong set of results demonstrates the intentionality of our approach to capital allocation. We have been steadfast in our focus on investing and distributing cash resources, to increase our efficiency and maximise shareholder value. Despite the macro-economic headwinds and Eurasia fluidity, we are confident that the steady steps taken to ‘Fix, Optimise and Grow’ the business will continue to deliver exceptional results for our shareholders and communities.”

Operational Performance

Our operating environment continued to be difficult, with the impact of Russia’s invasion of Ukraine compounding an already constrained global supply chain. However, our active move toward defensive, relatively asset light and cash generative industrial sectors has bolstered the business against these macro headwinds.

The Industrial Equipment and Services business performed exceptionally well with both Equipment southern Africa and Equipment Eurasia delivering strong results. Equipment southern Africa’s revenue grew by 7.7% to R9.4 billion driven largely by machine sales and rentals and exceptional growth in greater African territories.

Equipment Eurasia grew revenue by 11.8% to R5.7 billion buoyed by strong mining activity and excellent growth in Russian aftermarket revenue. However, the division was impacted by Covid-19 regulations along the Chinese Mongolian border which resulted in machine inventory being stuck at the border. Trading in Russia is becoming increasingly difficult as the full effect of sanctions are beginning to be felt and while Barloworld remains focussed on compliance with emerging regulatory changes, managing costs and working capital requirements, as well as supporting our employees and customers remains key. The constrained outlook has resulted in impairment of $68.5 million (R1.0 billion) being recorded at 31 March 2022, based on lower estimated cash flows together with higher discount rates. We expect this trend to limit our medium-term top line growth but will be actively monitoring the situation both in Russia and Mongolia.

Our Consumer Industries business, Ingrain, grew revenue 45.7% to R2.9 billion compared to the prior period, which only took into account five months of Ingrain’s performance in the prior period, as the business was incorporated from 1 November 2020. Ingrain’s performance was boosted by increased demand from the confectionery and paper making sectors, improved agri-product recoveries and our focus on achieving higher sales volumes.

The Car Rental and Leasing business performed exceptionally well as the benefits of its repositioning strategy continue to materialise. The car rental operating profit of R405 million is up 255% compared to the previous year and 109% from the pre-Covid-19 period ended 31 March 2020. The business operating model, which is centred on proactively catering to the ever-evolving needs of customers, has presented an opportunity to offer end-to-end mobility solutions to customers, and paid-off in a very defensive portfolio with positive returns.

Progress against our strategy

We have continued to actively shift our portfolio into relatively asset light and defensive assets within our selected verticals. Our exit from the Logistics business is largely complete, having concluded the sale of most of the businesses within the Transport division. We are progressing discussions with an interested party for the sale of the Supply Chain Solutions (SCS) business.

The board had previously approved the exit of our Car Rental and Leasing business through a sale or unbundling and separate listing of the business. Significant progress has been made in preparing the business to operate on a standalone basis and the separation remains on track to be completed this calendar year.

While we near the completion of our identified portfolio changes, we will continue to actively assess our portfolio of businesses and any potential acquisitions in line with our strategy and investment guardrails to ensure optimal performance and returns.


The group continues to focus on achieving a balance between delivering attractive returns to shareholders, investing in the business, and maintaining a strong capital position. Despite the prevailing uncertainties in our operating environment, we are cautiously optimistic, encouraged by the results of our strategy. The order book for Equipment southern Africa is set to maintain the Industrial Equipment and Services’ momentum while we assess the ongoing situation in Eurasia. Our focus in the foreseeable future will be on managing costs and working capital requirements in Eurasia, as well as supporting our employees and customers.

The prospect of a long-drawn out Russia/Ukraine crisis and concerns of possible subsequent Covid-19 infections in South Africa creates uncertainty. However, investments in technology and people and our focus on improving sales volumes are expected to support the Consumer Industries business moving forward.

The Car Rental and Leasing business has not received any approaches to acquire the business which the board deems as having sufficient merit to be progressed. Accordingly, the board continues to evaluate the possibility of a separate listing via an unbundling. The group will update the market on this process when a decision on the separation pathway has been finalised.

“There are a number of factors outside of our control, which we will seek to proactively manage and overcome. However, there are a lot of factors within our control and the steadfast execution of our strategy and ambition places us in a comfortable position to withstand the uncertainties ahead” said Sewela.