Barloworld (BAW) H1 2025 earnings summary

Executive summary

• Revenue for the six months ended 31 March 2025 declined 5.8% to R18.1 billion, with EBITDA margin stable at 12.4% and operating profit from core trading activities at R1.6 billion, down 14.3%.

• Headline earnings per share (HEPS) fell 20.5% to 423 cents; normalised HEPS (excluding VT) at 356 cents.

• Strategic focus on ESG, employee well-being, and operational efficiency continues, with investments in environmental infrastructure and digital capabilities.

• Interim dividend declared at 120 cents per share, reduced from 210 cents in 1H24, in line with dividend policy.

• No work-related fatalities reported, but an increase in lost-time injuries prompted corrective actions; LTIFR at 0.16.

Financial highlights

• Group revenue (excluding VT) declined 2.2% to R16.8 billion; EBITDA margin (excluding VT) improved to 12.5% from 11.9%.

• Free cash outflow of R2.8 billion in H1, mainly due to increased working capital investment.

• Net debt increased to R4.8 billion from R1.4 billion in September 2024, with net debt/EBITDA at 1.6x, within covenant limits.

• Return on invested capital (ROIC) at 11.8% (target >14%), and return on equity (ROE) at 10.1% (target >15%).

• Net finance costs improved by 24% due to lower interest rates and reduced floor plans.

Outlook and guidance

• Cautious outlook for the remainder of 2025 amid subdued mining activity, geopolitical uncertainty, and volatile commodity markets.

• Equipment Southern Africa expects subdued mining activity to persist, with potential upturn in the second half of the calendar year; order book up 25% to R3.6 billion.

• Mongolia anticipates moderate activity in prime product deliveries, with GDP growth forecast at 6.2% for 2025 and order book at $21 million.

• Ingrain expects volume recovery and margin reprieve from easing grain prices and benefits from new effluent plant.

• VT (Russia) to remain at break-even, with ongoing cost discipline and asset protection.