Barloworld expects slowdown in mining equipment sales as commodity cycle cools

20th November 2023 By: Irma Venter - Creamer Media Senior Deputy Editor

Barloworld expects slowdown in mining equipment sales as commodity cycle cools

Barloworld expects a 10% to 15% decline in the 2024 Southern African mining equipment industry on the back of slowing commodity demand and weak commodity prices.

“Having said that, we are encouraged by activity in the construction space,” says Equipment Southern Africa CE Andronicca Masemola

She says key demand drivers in this space will include road rehabilitation projects, especially along the N2 and N3 corridors in South Africa, rail projects in Angola, as well as the expected resumption of Total’s liquid natural gas project in Northern Mozambique.

“The energy and transportation sector is also a key growth focus for us.”

Equipment and consumer industries group Barloworld on Monday released its financial results for the year ended September 30.

Revenue for the year from continuing operations was up 14.3%, to R45-billion, compared with the previous financial year.

Group operating profit from core trading activities improved by 18.6%, to R4.3-billion.

For the year under review, Equipment Southern Africa delivered record returns.

Machine sales growth, aftermarket-sales revenue and fleet replacements resulted in 34.9% revenue growth, to R29.5-billion, while operating profit was up by 19.1% to R2.5-billion. 

Equipment Eurasia, which includes the Russian business that is still heavily impacted by trading sanctions following Russia’s invasion of the Ukraine, also had a strong year, aided by growth in the Equipment Mongolia business.

While revenue was 23.2% lower, at R8.2-billion, the division recorded R1.4-billion in operating profit from core trading activities – an increase of 21.2% over the prior period.

Within the Consumer Industries business, Ingrain’s revenue increased by 11% to R6.6-billion, supported by growth in exported starch volumes and favourable exchange rates. 

However, operating profit from core trading activities was down 17%, to R591-million, as Ingrain was hit by unexpected plant breakdowns and subsequent plant maintenance costs.

“Looking ahead, we anticipate that external factors impacting the industry will linger for the foreseeable future, but we have proved the agility of our business to navigate these risks,” noted Barloworld CEO Dominic Sewela.

“At lot of things are happening that we can’t control. As we look ahead, we expect external factors to prevail for the immediate future in terms of the cyclicality of commodity prices and geopolitical challenges that will impact global growth, but, notwithstanding that, what we can control is aftersales, for example, as we have really managed to increase our machine population.”