Barloworld (BAW) H2 2024 earnings summary

Executive summary

• Delivered resilient performance in a challenging macroeconomic and trading environment, supported by portfolio diversification and disciplined strategy execution.

• Revenue declined 7% to ZAR 41.9 billion for the year ended 30 September 2024, reflecting tough economic and sector conditions.

• Achieved environmental and social milestones, including increased renewable energy use, surpassing 50% women in leadership, and EDGE advanced certification for Botswana facility.

• Portfolio simplification and debt reduction continued, with gross debt down 29% and U.K. pension fund liability fully settled.

• Noted potential export control breaches in VT division, with voluntary disclosure to BIS and ongoing independent investigation.

Financial highlights

• Revenue declined 7% to ZAR 41.9 billion, mainly due to lower sales in Equipment Southern Africa, partially offset by strong Eurasia performance.

• EBITDA margin maintained at 12.2%; operating profit margin at 9%.

• Normalized EBITDA up 9%, operating profit from core trading up 3%, ROIC up 2.3% to 19%, ROE up 2.6% to 15.5%.

• Normalized HEPS up 21% to ZAR 13.98; reported HEPS down 12% to ZAR 10.22 due to non-recurring items.

• Final dividend of ZAR 3.10 per share, total ZAR 5.20 for the year, up 4% year-over-year.

Outlook and guidance

• Expect continued subdued mining activity in Southern Africa through most of 2025, with construction sector activity picking up.

• Mongolia's prime product activity to moderate but still show growth; opportunities depend on resolution of Sovereign Wealth Fund issues.

• Ingrain expected to benefit from improved supply chain efficiencies and better consumer confidence as interest rates decline.

• Group remains optimistic for 2025 but cautious due to geopolitical and regulatory risks.

• Focus on growing aftermarket and services to improve margins amid global economic headwinds.