Press releases

Barloworld continues to deliver on its Fix, Optimise, Grow strategy despite tough trading environment

30 June 2020

Strength of balance sheet and quick response in the face of a pandemic will aid Barloworld to endure global uncertainty

Key financial highlights:

Revenue of R25.2 billion, down 12.2%;

Operating margin# down from 5.5% to 4.4%;

Covid-19 austerity measures expected to achieve overhead cost containment between R700m and R720m##;

Strong balance sheet with committed funding capacity of R8.1 billion;

The Group Net debt-to-EBITDA# ratio is at 0.9 times (FY19: 0.2 times);

Group EBITDA to gross interest cover# ratio of 5.5 times (1H’19: 5.7 times);

Group return on invested capital# of 9.2% (1H’19: 11.3%);

Normalised headline earnings per share from continuing operations at 354 cents (1H’19: 521 cents).

The challenging trading conditions experienced prior to COVID-19 is expected to intensify in the second half, but Barloworld is well positioned to withstand these challenges

# excluding IFRS 16 impact
## Before Implementation Costs

Commenting on the results, Barloworld CEO Dominic Sewela said: “The first half of the financial year was characterised by a combination of a tough trading cycle and the initial impact of the COVID-19 pandemic. While we have seen lower performance compared to the prior period, we have acted quickly to identify areas of exposure and implement austerity measures to minimise the impact on our business. We believe these actions together with our resilient balance sheet will serve us well in ensuring the longevity of the business.

He adds: “The delivery of our ‘Fix, Optimise, Grow’ strategy and managing for value approach is firmly in place across the Group and along with maintaining a resilient balance sheet, we can ensure the longevity of the business. Barloworld will continue to adapt and transform to align with the expected volatile and uncertain macroeconomic environment.”

Operational Performance

The Automotive and Logistics division’s performance is reflective of the current trading conditions affecting all business units, driven by reduced market demand and pressure on pricing as a result of a weak local macro-economic environment. During March, trading was negatively affected by the stringent South African lockdown regulations, but we anticipate the industries in which we trade to recover in the second half. Full volumes are likely to return to prior levels by 2021.

Equipment southern Africa made encouraging progress in rightsizing and streamlining operations in Botswana and Angola with ROIC improving period on period. Equipment Russia produced strong results for the period driven by robust mining activity, particularly in the gold sector. Its aftermarket contribution remains healthy.

Higher operating losses at the Southern Africa Corporate Office were largely driven by lower rental income in Barloworld Limited and investments in corporate affairs activities and other strategic projects.

Progress on strategy

Barloworld has made good progress against its stated organic and inorganic growth objectives and the goal remains to double the value of the business every four years. Barloworld will achieve this by targeting opportunities that are in line with its investment criteria in high growth emerging markets across Africa and Asia. This strategy is enabled by a clear set of guardrails (capital light, high growth, cash generative) which have remained relevant despite the ever-changing market conditions.

Fix and optimise: The Logistics business turnaround is ongoing, and the Group is continuously assessing performance and the medium-term outlook in light of the current environment. Opportunities to unlock value are continuously being evaluated. The Avis Budget and Avis Fleet businesses have been merged to unlock synergies and value by integrating end-to-end mobility solutions to customers, while creating efficiencies through the consolidation of common processes.

Active shareholder model: Work has been done to change the group’s operating model to focus on building core competencies in finance, strategy, mergers and acquisitions (M&A), human capital and corporate affairs to support the execution of the overall strategy and effectively allocate resources.

Growth: Barloworld continues to consider organic and inorganic growth opportunities aligned to our guardrails in chosen markets, including the African continent, and will continue to be disciplined and cautious in its approach, while giving due consideration to the changed macroeconomic environment.


A strong balance sheet and stable mature business platforms are key strengths that will help the group navigate through challenges resulting from the ongoing COVID-19 pandemic and macroeconomic fallout. Business confidence in the regions Barloworld operates in has dropped significantly and the group expects the average consumer to remain under pressure, while the trading environment will be impacted by the lower outlook for recovery and growth.

The board and management remain committed to the implementation of prudent measures aimed at reducing and containing costs to preserve cash in the immediate period while ensuring the medium to long term strength of the organisation.