Profit at Bell Equipment for the six months ended June 30 increased to R157-million, up from R151.2-million at the end of June last year. Revenue for the period breached R3-billion, up marginally from R2.9-billion as at June 30, 2012.

Sales volumes were down 9.8%, but the impact of the recent weak rand had a positive impact on margins.

The capital equipment manufacturer says the first six months of the year saw “tough market conditions . . . where gains as a result of exchange rate volatility com- pensated for a reduction in demand, particularly from the resources sector”.

The company says it responded well to the economic reality of generally lower market demand, but that its factories had to run at near full capacity for a four-month period to fill the supply line to its new North American distributors. However, the second half of the year should see lower production rates in line with current equipment demands.
CEO Gary Bell tells Engineering News that the drop in demand from the resources sector is not linked to South Africa’s current labour malaise.

“Things are particularly bad in Australia and South-East Asia, and to an extent in Africa. Coal is holding up – I guess we have to keep the lights on – but most other sectors are struggling.”

Bell expects continued uncertainty in the company’s traditional global mining and construction markets to prevail through to year-end, but says the group has taken “appropriate action to respond to the situation”.

“New products and markets will also offset some of the expected shortfall.”

In a review of market conditions, Bell Equipment states that both the Richards Bay and German factories have “transi- tioned smoothly” to the production of the next-generation E-Series range of small articulated dump trucks, with initial reports from the field indicating that the efficiency and other product improvements have been well received by customers.

Less positive news, however, is that the minority empowerment shareholder in Bell Equipment Sales South Africa – Kagiso Trust Investments (KTI) – has given notice of its intention to dispose of its 22.5% shareholding in terms of a put option.

The exercise price is still to be finalised.

Bell says KTI has indicated that it cannot “marry” the sector Bell Equipment operated in with its new investment strategy.

It is expected that the transaction will be concluded no later than October 31.

It is Bell Equipment’s intention to replace KTI with another empowerment partner.

Bell, in 2007, sold a 30% stake of its then newly incorporated subsidiary, Bell Equipment Sales South Africa, in a broad-based black economic-empowerment transaction.

The subsidiary houses, among others, all the South African customer service centres.