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Barloworld earnings rise 255%

Johannesburg - Industrial brands management group Barloworld [JSE:BAW] on Tuesday reported a 255% rise in headline earnings per share (Heps) from continuing operations to 144.3 cents for the six months ended March 2011.

Diluted Heps from continuing operations were 143.5 cents from 40.4 cents before. Total diluted HEPS rose to 143.5 cents from 6.6 cents.

Revenue was 17% higher at R23.6bn, while operating profit increased 44% to R854m.

An interim dividend of 50 cents per share was declared - up 150% from the previous year's 20 cents.

CEO Clive Thomson said the group produced strong growth in operating profit and earnings during the period. Trading results for the first six months continued to show improvement driven mainly by strong mining demand on the back of strengthening commodity prices.

The company said that while the world economy continues on its path of recovery, this recovery is taking place at a much faster pace in the emerging economies compared to the developed economies.

Equipment southern Africa experienced a rapid recovery in the mining and contract mining markets and, notwithstanding muted construction and infrastructure demand, the group's customer order book is now back to record levels. The principal challenge is ensuring sufficient machine availability to meet increasing demand. "Nonetheless we are expecting strong second half revenues and profitability."

The austerity measures in Spain mean that there is unlikely to be any significant change in activity levels in the short term.

"However, we should see a return to profitability in the second half due to the actions taken to reduce the cost base. We have recently been awarded two large package deals with important Spanish customers for $156 million and $235 million respectively," the company said.

"The majority of the units will deliver into our 2012 and 2013 financial years and should further underpin our recent market share gains."

The Russian order book remains strong and Barloworld expects another good result in the second half. It continues to expand its dealership footprint to ensure that it achieves its market share objectives and this bodes well for long-term growth in revenues and profitability.

The automotive and logistics division should continue to benefit from the recovery in industry vehicle sales. The impact of the earthquake and tsunami on Japanese vehicle and component manufacturers would appear to be significant and it is likely to negatively impact the results of the group's automotive business units.

The car rental business will focus on cost reductions to ensure that it recovers margins in an extremely competitive market. "Our fleet services business will continue to produce good results and we await the outcome of some significant contract adjudications which could materially impact both cash flow and profitability. The logistics business will focus on recovering profitability."

The handling division will further capitalise on the recovery now evident in most of their geographies. Order books and short-term hire utilisation rates have improved strongly.

"With order books continuing to increase across most businesses, we anticipate a strong second half of the financial year with earnings expected to be significantly up on both the first half of 2011 and the second half of last year," Thomson said.

"As the recovery gains momentum in most of our key market segments, particularly mining, our focus has shifted to driving profitable growth and enhancing the overall level of financial returns across our businesses. Our financial position remains strong and we are well placed to take advantage of a number of exciting growth opportunities in the year ahead," he concluded.
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