Barloworld (BAW) Q3 2024 TU earnings summary

Executive summary

• Delivered resilient performance amid complex macroeconomic conditions, with Southern Africa facing challenges from commodity cycles and high interest rates, while Mongolia benefited from infrastructure expansion and robust Chinese demand.

• Mining customers in Southern Africa were constrained by cost pressures, negatively impacting Equipment Southern Africa and Ingrain.

• Mongolia delivered strong performance, driven by robust commodity demand and increased coal exports to China.

• Group focus remained on balance sheet strength, reducing net debt significantly over the 11-month period.

• Ingrain's turnaround plan is yielding benefits, especially in the latter half of the year.

Financial highlights

• Group revenue declined 7.4% to R37.4 billion from R40.4 billion year-over-year.

• EBITDA fell 14.3% to R4.2 billion; EBITDA margin dropped to 11.1% from 12.0%.

• Net debt reduced from ZAR 6.3 billion to ZAR 3.5 billion over 11 months, a 44% reduction.

• Equipment Mongolia achieved 61% revenue growth, with double-digit aftermarket and service growth.

• Ingrain stabilized volumes and improved margins through cost containment and operational efficiencies.

Outlook and guidance

• Ingrain targets medium-term operating margins of 11–13%, with stabilization expected beyond the next year.

• Equipment Southern Africa expects improved construction activity as customer sentiment turns positive and tender adjudications progress.

• Mongolia’s order book remains strong at nearly $80 million, supporting continued growth.

• Board will issue a trading statement when there is reasonable certainty on full-year results; annual results expected by 25 November 2024.

• Strategy of "Fix, Optimise and Grow" remains unchanged.