Barloworld (BAW) H1 2025 earnings summary

Executive summary

• Revenue for the six months ended 31 March 2025 declined 5.8% to R18.1 billion; excluding VT, revenue was down 2.2% to R16.8 billion.

• EBITDA margin was 12.4% (up to 12.5% ex-VT); operating profit from core trading activities was R1.6 billion, down 14.3% year-over-year.

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

• Strategic focus on ESG, employee well-being, and operational efficiency, with no work-related fatalities and improved LTIFR.

• Ongoing investigation into potential export control violations at VT, with submission due 2 September 2025.

Financial highlights

• Group headline earnings per share (HEPS) fell 20.5% to 423 cents; normalised HEPS (ex-VT) at 356 cents, flat year-over-year.

• Free cash outflow of R2.8 billion, mainly due to increased working capital investment, expected to reverse in H2.

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

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

• ROIC at 11.8% (target >14%), ROE at 10.1% (target >15%).

Outlook and guidance

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

• Equipment Southern Africa expects trading to remain at current pace; construction to grow slowly; optimism for Zambian copper demand.

• Mongolia expects moderate activity; order book at $21 million, with coal comprising 77%.

• Ingrain expects volume recovery and margin reprieve from easing grain prices and new effluent plant in H2.

• VT expected to trade at breakeven levels amid fragile stability and tight constraints.