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Bell remains bullish about South African market

14th September 2018

By: Nadine James

Features Deputy Editor

     

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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 that, while working capital allocations were biased toward the “vibrant” markets in the northern hemisphere, Bell was “keeping an extremely keen eye on its home turf”, and that it would move immediately if it saw 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 did 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 on 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 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 still were 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.”

Goosen noted that the group was 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.

Goosen noted that there were some positive signs for African mining markets, and that the company was well positioned to exploit the opportunities available in several international markets.

Further, he commented that Bell was flexible and robust enough to mitigate any unfortunate economic consequences resulting from the impeding Brexit and potential escalations in the US’s multiple trade wars.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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