Barloworld pushed revenue up 2% to R32.5bn and operating profit up 5% to R1.8bn in the six months to March 2017. Headline earnings per share rose 9%, the same percentage as the interim dividend, as cash generated from operations halved to R929m from R1.8bn in the same period previously.

The group says it produced a "pleasing overall result in challenging trading conditions".

Despite tough logistics and automotive markets, the automotive division achieved a record result with all segments showing positive growth. The division generated revenue of R16.3bn — 11% ahead of last year. Divisional operating profit of R863m was 14% up, with an operating margin of 5.3% compared with 5.1% in 2016.

"Logistics performance was below the prior year due to the weakening trading conditions," CEO Dominic Sewela said on Monday. He took over the reins of the group in February, replacing Clive Thomson.

Sewela said the global industrial group’s Equipment Russia business outperformed expectations, while activity levels in Iberia — Spain and Portugal — remained disappointing.

Equipment Southern Africa produced an improved operating result despite the slowdown in mining demand. Barloworld expected some recovery in sub-Saharan African growth, despite the downside risks due to lower oil prices and possible further
ratings downgrades for SA.

"The results were in line with our expectations, although
they were weaker than consensus expectations," said Damon Buss, an equity analyst at Electus Fund Managers..

"The positives in the results were a solid improvement in Equipment Russia’s order book and margin and a good performance from automotive, which was primarily due to the profits generated off used car sales."

Buss said that steep price increases for new vehicles had improved demand for used vehicles, allowing dealers to increase prices of used cars. This would continue into the second half of financial 2017 and into financial 2018, he said.

"The negatives were the weak performance in Equipment sub-Saharan Africa, the continued weak performance by Equipment Iberia and poor below-the-line results," Buss said. The latter came from the loss on disposal of the agri-handling business and a poor result from group associate Energyst, which sold electricity generators for mining and oil utilities.

"Barloworld indicated the investment case of the Iberia business is being reviewed and an exit would be positive in our view" Buss said. "We were positively surprised by the new CEO’s focus on improving the returns of the business … overall, we think Barloworld is fairly valued at the current price."

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