Barloworld pays dividend despite earnings drop

Results were impacted by the acquisition of Mongolia business and restructuring costs.

Industrial and consumer giant Barloworld Group announced in a statement on Sens on Monday that its revenue declined 7% to R41.9 billion for the year ended 30 September 2024.

Earnings before interest, tax, depreciation and amortisation (Ebitda) declined 7% to R5.1 billion, although the Ebitda margin was maintained at 12.2%. Operating profit from core trading activities declined 12.6% to R3.8 billion.

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Read:
Dominic Sewela-led consortium in Barloworld takeover talks
Saudi Arabian firm in talks to buy South Africa’s Barloworld

Barloworld share price

The group declared a final dividend of 310 cents per share, bringing the total dividend to 520 cents per share – 4% higher than the corresponding period in 2023.

Barloworld notes its results have taken into account a $10 million (R180 million) provision related to an “earnout” structure for the acquisition of Barloworld Mongolia which has “outperformed expectations”.

In addition, it has also factored in a $26.7 million (R482 million) provision related to “inventory obsolescence and restructuring costs” for Vostochnaya Technica (the official Caterpillar dealer for Western and Eastern Siberia, Yakutia and the Northern part of Russian Far East).

Listen: Barloworld sees lower earnings in first half

Group finance director Nopasika Lila explains that on a normalised basis before these items, Barloworld’s Ebitda was up 9%, while operating profit from core trading activities up 3%.

In the period under review, Barloworld paid down debt, reducing gross debt by 29.0% from R11.1 billion to R7.9 billion. The group also made a final payment of R632 million, finalising the derisking of the United Kingdom (UK) pension fund.

Barloworld CEO Dominic Sewela notes that geopolitical risk has overtaken inflation as the primary risk factor in 2025.

“Barloworld expects consumer and business confidence to be boosted by lower global headline inflation and the ensuing monetary policy easing. Locally, trading conditions are expected to improve somewhat, driven by a revival in consumer and business sentiment stemming from the lower interest rate environment, the government of national unity, and progress made in reforming the electricity and logistics sectors,” he adds.

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Takeover talks

Barloworld announced on Friday, 15 November, that it has entered into negotiations with a consortium of investors, acting through a newly established special purpose vehicle. If concluded, the consortium will make an offer to acquire all of Barloworld’s issued ordinary shares.

The consortium includes Entsha – a new South African company linked to Barloworld CEO Dominic Sewela and his family – and Falcon Trading, a subsidiary of Saudi Arabian conglomerate, the Zahid Group.

The Saudi group started buying shares of Barloworld four years ago. One of its units, Zahid Tractor and Heavy Machinery Co, owns 18.9% of Barloworld.

The takeover deal could see Barloworld delist from the JSE.

Read: Saudi Arabia offers credit deal to SA to boost trade

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