Heavy equipment manufacturer Bell Equipment on Monday reported a reduced profit of R60.3-million for the six months ended June 30, compared with the R157.1-million generated during the first half of 2013, stating that a challenging environment had led many of the company’s customers to take a more cautious approach to capital equipment purchases.

The company added that labour unrest and instability in South Africa in recent months, following protracted wage strikes, had also impacted negatively on the company’s domestic market and had contributed to the 60% year-on-year decline in earnings per share (EPS).

Bell’s basic EPS for the six-month period fell to 62c, from 156c in the prior corresponding period, while headline earnings a share, at 61c, were also down from 156c previously.

The company said that, while revenue, at R3.44-billion, was up some 14% on the comparative period of 2013, factory capacity utilisation had been planned at much lower levels to correct inventory levels and to align to market demands.

Meanwhile, inventory reduction plans had delivered an 11.6% reduction in total inventory relative to the December 2013 year-end, and generated a R519-million positive cash flow from operations for the six-month period.

Net short-term interest-bearing debt was down R310-million from year-end and gearing had improved from 25% at the end of 2013 to 12% at June 30.

The company expected the European and North American markets to continue their gradual recovery in the second half of the year, adding that its plans to enhance and broaden its distribution channels were progressing well.

“Lower order intake and sales as a result of subdued activity from the mining sector is expected to continue for some time and measures have been implemented to improve profitability but there is still more work to be done,” the company added.

Meanwhile, the South African market was expected to deliver an acceptable return for the remainder of the year, despite the fact that the implementation of the National Development Plan was still not completed.

“Our comprehensive service network and full line product offering are market leading and will allow us to maintain a dominant position in our important domestic market,” the company said.