JOHANNESBURG (miningweekly.com) – JSE-listed Bell Equipment achieved a 6% year-on-year increase in revenue to R3.7-billion for the six months to June 30.
Headline earnings a share increased by 10% to 131c and an interim dividend of 20c was declared.
Bell CEO Leon Goosen cited ongoing economic growth and increased demand for equipment in Europe, the Americas and South East Asia as assisting Bell in delivering “satisfactory” interim results, despite the underperformance from the South African market.
He noted that investor appetite, particularly for the mining and construction industries, remained unresponsive and that the company expected this caution to linger in the run-up to the 2019 national elections.
However, he told Mining Weekly Online that while working capital allocations are biased toward the “vibrant” markets in the northern hemisphere, Bell is “keeping an extremely keen eye on its home turf”, and that it will move immediately if it sees some economic stimulus and policy certainty return.
“We’re still quite bullish on the South African market.”
For the period under review, profit increased by 11% to R133.1-million, despite margin pressure caused by a volatile currency.
Goosen added that Bell does not expect any immediate respite given the seemingly escalating global trade wars, Brexit and other political instabilities, but noted that the company had systems in place to mitigate the effects of volatile currencies.
“Rand strength impacts us as a net exporter, hence the margins were under pressure in the earlier part of the year. Our business model is set up to mitigate concentration risk with our global geographical and industry exposure.
Regarding African markets outside of South Africa, Goosen said positive management interventions had enabled the return to profitable operations.
He noted that Bell had to restructure some of the African businesses, and also migrated some into third-party dealer groups, to position itself to better serve its customers. He also added that there are still major opportunities in the Southern African markets.
“We are making sure that we continue to support our customers in the territory at the high levels they become accustomed to, and that we’re well-positioned to capitalise on the growth that Southern Africa has to offer.”
DIVERSIFICATION AND GROWTH
Bell’s E-series range of trucks has been well accepted and continues to lead the market in terms of providing the lowest fuel burn, lowest cost per tonne of material moved and in providing leading innovative features for on-site safety and vehicle protection.
“In Europe, our new products are doing well and will give us access to a wider customer and industry base, while the Americas offer good promise for the next few years as mining, aggregates and construction - the main users of our articulated dump trucks - all continue to show good growth.”
Goosen said that the strategic partnership with Japanese excavator specialist, Kobelco, has been very successful, and has met with good interest and uptake from the market.
“To bolster the traditional size classes, we introduced three mini excavator models in March . . . to develop new opportunities in the light construction, demolition and light forestry sectors.”
Further, while mining and construction make up the bulk of Bell’s industry sales, “the more diversified you are the more resilient you are to industry cycles . . . we will continue developing new markets”, Goosen said, adding that the company is looking to expand the range of its agricultural and forestry products and to continue to develop markets throughout the rest of world.
South East Asia is also a prime market as adoption of Bell’s products in Indonesia has been positive.
Further, the mining conditions and operations are very similar to those in Africa, meaning the company’s products are already well-suited to the environment.
Goosen added that the group is progressing its investigation into introducing broad-based black economic empowerment ownership partners to its South African manufacturing operations, having already successfully implemented an empowerment transaction for its sales distribution operation.
“We’re quite far down the line in investigating potential solutions to enhancing our transformation objectives at the South African manufacturing operations . . . before year-end we’ll be able to tell the market more in this regard.”
Looking ahead, Bell will continue to focus on its aftermarket and product support offering in all regions, including, for example, the expansion of the Bell Eisenach-Kindel facility in Germany.
“This will facilitate better flexibility and quicker responsiveness to customers to support the group’s market growth in the northern hemisphere.”
Goosen also indicated that the group’s American Logistics Centre, located in North Carolina, in the US, would start trading toward the latter part of this year, and is ideally positioned to service the expanding dealer network and rapidly growing truck population in the North American region.
He noted that there are some positive signs for African mining markets, and that the company is well positioned to exploit the opportunities available in several international markets.
Further, he commented that Bell is flexible and robust enough to mitigate any unfortunate economic consequences resulting from the impeding Brexit and potential escalations in the US’ multiple trade wars.