B A R LOWO R L D
BARLOWORLD
Leveraging Experience to
Take Brands Global PRODUCTION: William Denstone
One of South Africa’s oldest companies, a reputation for ethical conduct, innovation and a commitment to giving back has ensured Barloworld a longevity which surpasses 117 years. A distributor of leading global brands, Barloworld provides integrated rental, fleet management, product support and logistics solutions and currently has operations in 16 countries around the world. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: DISTRIBUTION
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Headquartered in Johannesburg SA and Maidenhead UK, the core divisions of the Barloworld group comprise Equipment and Automotive and Logistics. Under these umbrellas fall earthmoving and power systems, and car rental, motor retail, fleet services, used vehicles and disposal
solutions, logistics management and supply chain optimisation respectively. These flexible, integrated business solutions which Barloworld brings to customers are backed by leading global brands. Behind Barloworld’s success and staying power has been a proven track record of building long-term relationships
with global principles and customers. This is paired with the ability to develop and grow businesses in diverse geographies, including challenging territories with high-growth prospects. Of over 17,400 total employees, 79% are committed to serving Barlworld’s South African operations. CATERPILLAR ACQUISITION The sale of its underperforming Iberian equipment business to privately owned Italian group Tesa S.p.A. in June brought Barloworld a R2.5 billion windfall. The proceeds of this sale now look set to be put to excellent use in the form of the acquisition of a business from Caterpillar, the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. “I have given myself a year to identify a business and I have already engaged Caterpillar,” explained Chief Executive Dominic Sewela to Reuters on the rationale behind the choice. “They have given me a commitment to a specific area.
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BARLOWORLD
“Equipment is the bulk of our business so it makes sense that we continue to invest in that area. I am looking for heavy construction and mining-related type of geographies,” Sewela outlined. The remainder of the proceeds from the recent sale would be brought back into South Africa, possibly to then buy back shares. Barloworld Equipment is the official dealer for Caterpillar’s CAT construction, mining and industrial machine range in eleven southern African countries. In addition to the domestic dominance, it also holds the rights in Spain, Portugal, Siberia and the Russian far east. POSITIVE PERFORMANCE The equipment division was the main contributor to an 18% rise in Barloworld’s full-year profit, which was aided significantly by strong
growth in mining. Operating revenue for the company’s Russian equipment business also boomed by 57% to $606 million in the year to the end of September, while revenues from the South African equipment unit rose 8.1% to R19.8 billion. The growth was largely driven by higher equipment sales - up 21% - in South Africa, Mozambique and Zambia and rental revenues, which increased by 25%. Return on equity also eclipsed the previous year, standing at 11.4% compared to 10.5%, while free cash generation of R3.6 billion beat the R3.4 billion of 2017. “The group produced a strong result in the reporting period, despite a difficult trading and economic environment,” summarised Sewela. “The solid performance was particularly due to robust earnings growth in Equipment
// WE ARE LOOKING FORWARD TO OUR NEW HEADQUARTERS BEING A PLACE WHERE WE CAN GROW AS A BUSINESS AND CREATE A BOLD NEW FUTURE // Russia, the turnaround of the Logistics business and the strong associate income from the Bartrac JV in the Katanga region of the DRC. “Equipment southern Africa and Automotive performances were satisfactory in a challenging economic cycle.
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“The group will continue to focus on driving our businesses to their full potential through the optimal allocation of capital and the execution of our medium-term strategy; this sets a strong foundation for the pursuit of value-enhancing acquisitive growth opportunities that fit our capabilities and the optimisation of the group’s capital structure.” SHARE OFFER OPENS In a move set to boost its empowerment credentials significantly, April saw Barloworld announce its R3.5bn BEE scheme, offering black South Africans the chance to buy shares in Khula Sizwe Property Holdings, a new black-owned commercial property company.
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Black investors and about 14,000 of Barloworld’s management and employees will own shares in Khula Sizwe, which was established for the empowerment scheme. Khula Sizwe’s properties include motor retail properties with a market value of R1.68bn, industrial properties worth R914 million, commercial properties worth R95m, mixed commercial and industrial properties worth R13m, residential properties worth R29m and development properties worth R130m. “Through Khula Sizwe, shareholders have the opportunity to invest in a property company with less volatility than a share-based scheme,” stated Tantaswa Fubu, Barloworld spokesperson
// THE GROUP WILL CONTINUE TO FOCUS ON DRIVING OUR BUSINESSES TO THEIR FULL POTENTIAL THROUGH THE OPTIMAL ALLOCATION OF CAPITAL AND THE EXECUTION OF OUR MEDIUM-TERM STRATEGY //
BARLOWORLD
and executive for human capital, adding that the offer to give black South Africans the opportunity to participate in a property-based B-BBEE share scheme that is not related to a share price was a first of its kind in the country. “The company has guaranteed rental income from Barloworld as Khula Sizwe’s tenant, making their investment more stable with predictable cash flows, and reducing risk while creating value for shareholders.” PRISTINE HEADQUARTERS The stunning new Barlow Park development in Sandton is a R3 billion project overseen by developer Atterbury, a mixed-use development that will be anchored by Barloworld and will house
the group’s new corporate headquarters as it moves into another new era. It is being developed through a three-way partnership between Barloworld, Atterbury and African Rainbow Capital, with each group holding one-third of the landmark site. The build is expected to roll out in phases over an eight-year period. Construction commenced in July of 2018, with Sewela outlining that the redevelopment of Barlow Park was part of the group’s strategic focus to maximise the use of and unlock value in all its assets. Meanwhile Kamogelo Mmutlana, CE of Barloworld Logistics, clarified that the planned fit-for-purpose building would operate as a high-performance centre, encouraging collaboration between
employees, engaging clients and offering a business centre where innovation and ideas flourished. “We have deep-seated roots in Barlow Park, but this move will see us becoming part of an important business node within Gauteng,” Mmutlana said. “This project is arguably one of the most ambitious in the history of Barloworld Logistics. We are looking forward to our new headquarters being a beacon for all our stakeholders, a landmark within the precinct and place where we can grow as a business and create a bold new future.”
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