Barloworld posts profit on after-market sales

UPDATE: This article has been updated to include Fin24's video interview with Barloworld CEO Clive Thomson.

Johannesburg - Barloworld [JSE:BAW] reported a 7% rise in full-year profit on Monday, as after-market sales helped the logistics and heavy equipment firm overcome weakness in the mining industry and a slowdown in Russia.

Barloworld, the biggest dealer of Caterpillar mining trucks in Southern Africa, said headline earnings per share (Heps) totalled 877.7 cents in the year to end-September, from a restated 817.1c a year earlier.

Heps, the main measure of profit in SA, strips out certain one-time items.

Thomson told Fin24 the disposal of its motor vehicle operations in Australia for R1.3bn will enable Barloworld to deploy that capital into other opportunities within the group generating higher return on capital.

He said Barloworld has been hit by slack demand from the mining sector. In Russia, the ongoing Ukraine crisis has also put pressure on demand.

So far, US and European Union sanctions against Russia have not targeted its mining sector, which has helped shield Barloworld from the worst of the fall-out from the crisis, said CEO Clive Thomson.

"Should the situation between Russia and Ukraine escalate and should heavier sanctions be imposed, it could have a more significant impact on our business there," he said.

Overall, business was underpinned by strength in after-market sales, which include parts and services for equipment previously purchase by customers.

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