Release Date: November 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Barloworld Ltd (BRRAY, Financial) increased its renewable energy consumption and invested in solar PV capacity, contributing to environmental sustainability.
- The company surpassed its goal of having at least 50% women representation in leadership, showcasing strong diversity and inclusion efforts.
- Barloworld Ltd (BRRAY) reduced its gross debt by 29%, demonstrating effective financial management.
- The Mongolia division's performance exceeded acquisition expectations, triggering a $10 million earnout.
- The board approved a final dividend of 310 cents per share, representing a 4% growth relative to the prior year.
Negative Points
- Barloworld Ltd (BRRAY) experienced a 7% decline in overall revenue, primarily due to reduced equipment sales in Southern Africa.
- The VT division faced potential export control violations, leading to a provision of $27 million for restructuring costs.
- The company's return on invested capital (ROIC) dipped from the prior year, although it remained above the cost of capital.
- The revenue reduction in Southern Africa was attributed to weak global economic conditions and subdued mining activities.
- The Ingrain division faced challenges with operating efficiency and higher fixed costs, impacting its operating profit.
Q & A Highlights
Q: Can you provide an update on the potential offer by a consortium to acquire all the issued shares in Barloworld, including when it might become clear if there is a firm intention or not? Also, will this lead to the delisting of Barloworld from the JSE?
A: (Unidentified_2) Currently, we cannot comment beyond what the cautionary statement says. If there is any change, the company will issue an updated cautionary.
Q: What is the outlook for equipment in Southern Africa in terms of revenue growth and margins? Can you grow profits in financial year 2025 given the mining cycle weakness?
A: (Unidentified_4) We expect current conditions in the mining segment to prevail for most of 2025, with improvement expected towards the end of 2025 or 2026. Construction is starting to pick up, but mining still carries the biggest revenue mix, so we don't expect significant improvement year-on-year.
Q: Please talk about Ingrain's outlook in terms of supply chain efficiencies and what this means for margins and profit growth in 2025.
A: (Unidentified_6) We are focusing on better supply chain planning with key customers to improve stock availability and plant throughput. This should lead to fewer grade changes, increased plant availability, and ultimately better margins. We expect this work to take 18 to 24 months to fully integrate.
Q: Can you provide more information about the potential export control violations in VT, including the seriousness of these violations?
A: (Unidentified_2) We have appointed an independent investigator to verify the veracity of the potential violations. The work is underway, and we expect to submit a report to BIS by March 3, 2025. It is premature to provide details until the investigation is complete.
Q: What is the outlook for Mongolia's order book, and can you elaborate on the Mongolia Wealth Fund issues?
A: (Unidentified_5) Mongolia's prime product activity will moderate, but overall growth is expected compared to prior years. The Wealth Fund issues involve the government claiming a percentage of strategic minerals discovered with government funds, which could impact unlocking potential projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
