Barloworld FY HEPS up 5.5%

Barloworld, a global industrial company, has recently released its annual results showing a 5.5% increase in headline earnings per share. The Group CEO, Dominic Sewela, discussed the company's performance and outlined the key factors contributing to the positive results in an exclusive interview with CNBC Africa. Amidst challenges in the operating environment, Sewela expressed satisfaction with the financial numbers, attributing the growth to strategic initiatives and prudent management. Sewela highlighted the impact of geopolitical challenges and the economic climate on the company's operations, particularly in regions like South Africa. Despite these obstacles, Barloworld managed to achieve pleasing results, reflecting a steady growth year-on-year in earnings from continuing operations. This growth was driven by the execution of the 'fix, optimize, and grow' strategy, which involved asset disposals and capital reallocation to drive value creation. One of the key measures used by Barloworld to evaluate its business performance is the return on invested capital (ROIC). Although the overall ROIC for the group stood at 14.3%, challenges in certain business segments, such as the in-grain business, created a drag on the number. Sewela indicated that efforts were being made to improve the ROIC in the coming year, with a focus on enhancing operational efficiency. Furthermore, diversification played a crucial role in Barloworld's resilience, with operations in various geographies and industries contributing to the overall profitability. The company's operations in Russia and Mongolia, where ROIC exceeded 20%, were highlighted as key drivers of growth. Sewela emphasized the importance of geographic and commodity diversification to mitigate risks associated with market fluctuations. In terms of capital management and financial strategies, Sewela discussed Barloworld's approach to debt management and cash generation. The company's net debt position, excluding certain liabilities, was reported as positive, providing flexibility for potential acquisitions and investments. Despite the current economic uncertainties and the possibility of rising interest rates, Barloworld remains focused on paying down debt to optimize its capital structure. Looking ahead, Sewela hinted at the company's intention to prioritize growth opportunities that align with its strategic objectives. Barloworld's commitment to delivering value to shareholders was underscored by its track record of returning capital through dividends, share buybacks, and asset unbundling. By maintaining a disciplined approach to capital allocation and operational efficiency, Barloworld aims to sustain its financial performance and drive long-term value creation for its stakeholders.