Trading conditions in SA will remain tough, Bell Equipment warns
Bell seeks growth in South America
Bell Equipment, the listed designer, manufacturer and distributor of heavy equipment, is expanding its footprint in South America as it searches for growth outside the depressed South African market.
This comes as the company bemoans a number of negative factors in SA, including the prolonged policy uncertainty on land reform and lack of economic stimulus.
Bell CEO Leon Goosen on Monday said geographic diversification countered difficult conditions experienced in other geographies.
Speaking after the release of the company’s results for the six months ended June 30, Goosen said key sectors in SA, mining and construction, have experienced poor trading conditions.
Bell supplies equipment to the construction, mining, quarrying, agriculture, forestry and waste-handling industries.
“As you can see the traditional construction companies such as Group Five and Basil Read are struggling,” he said.
Goosen said North America was another region earmarked for growth given the acceptance of Bell products and potential to grow dealer network and market share.
“In this mature and highly competitive market the focus is on supporting the dealer network to ensure that we have the correct levels of support for sustained growth,” he said.
In Europe, demand in the UK remains strong but weakness in the British pound affected margins.
“The rest of the European dealer network continues to perform well, with pleasing growth in Germany, France and Russia, with the group’s products again being well received at Bauma Munich, the premier global exhibition for construction and mining equipment in Europe.”
Goosen said the company was watching the Brexit developments closely. “The UK is an important market for us,” he said.
Bell’s European presence includes dealer support operations in the UK, France, Russia and Germany, as well as an assembly plant and a parts logistics centre in Germany, which distribute product to independent dealers in North America, Europe and Asia.
In the six months to end-June, Bell increased revenue from the previous R3.7bn to R4bn, while profit for the period improved 14%, from R133.1m to R152.3m.
Headline earnings per share were up 25% from 131c a share to 164c a share. The company declared an interim dividend of 20c a share.