Barloworld on Monday reported an 18% increase in operating profit, to R3.53-billion, for the year ended September 30, compared with the previous financial year.

Revenue was up 11% to R65.1-billion.

Barloworld finance director Don Wilson said the weakening rand added R2.1-billion in revenue.

Barloworld represents the Caterpillar, Hyster and Massey Ferguson brands in South Africa, among others.

It was not all good news in Johannesburg, however, as Barloworld CEO Clive Thomson revealed that the company’s equipment order books showed a significant decrease compared with last year.

Firm back orders for the Equipment South Africa division stood at R3.5-billion in September 2013, compared with R5.3-billion in the same month last year.

“We certainly have seen a decline in firm back orders,” said Thomson.

Equipment Iberia managed to stem the bleeding, reporting a E1.3-million loss, down from the previous year’s E13.3-million loss. However, its order book was more than cut in half, at E50-million at the end of the financial year.

Equipment Russia showed a similar trend, with firm customer orders at $40-million on September 30, compared with $77-million in the previous year.

Thomson said US equipment manufacturer Caterpillar had seen a “significant slowdown in [global] mining capital expenditure in the past 12 months”.

He said the company only expected to see a recovery in the “back-half of 2014”.

However, Thomson warned that visibility was not strong here, as Caterpillar’s expectation was based on its view of the business cycle, and not on firm orders from customers.

The slowdown in mining spend also spelled a lull in production at Caterpillar’s plants. The subsequent surplus capacity meant that there was “no pressure” on customers to place their equipment orders far in advance, as had long been the case in the capital equipment market.


This meant there was “less visibility” of mining project pipelines, noted Thomson.

The construction sector was also not much aid in boosting Barloworld’s equipment order books, with South Africa showing little growth, but Angola and Zambia proving promising.

Thomson expected Barloworld’s equipment division to deliver fewer Caterpillar units in 2014 than in 2013, continuing the current downward trend. However, the parts and services business was expected to continue growing.

He was hopeful of rebuilding Barloworld’s equipment order books towards the end of 2014, in line with Caterpillar’s forecast for stronger mining capital expenditure.

Thomson regarded the performance of Barloworld’s Automotive and Logistics division as “the highlight” of the financial year, with revenue up 17%, to R34.4-billion, and operating profit at a record R1.48-billion, up 28%.

Thomson said all businesses within the division – retail, fleet services, car rental and logistics – performed well.