Barloworld to merge automotive and logistics business as deals dry up
Non-renewals of contracts and the disposal of its multi-temperature foods storage and distribution business KLL weighed on its results to end-September
Logistics and fleet management group Barloworld said on Monday it will merge its automotive and logistics businesses to save costs as it battles with lower trading activity.
Revenue and operating profit were hit in its year to end-September due to the closure of its logistics business KLL, with the company also experiencing lower trading activity, and non-renewal of contracts in late 2018.
Headline earnings per share fell 7.7% to 1,100c, with operating profit falling 13% to R3.27bn.
The company declared a total dividend of 462c, unchanged from the prior period.
The group’s logistics revenue fell 12.6% to R5.2bn, due to the closure of KLL and currency effects in Zimbabwe.
Barloworld disposed of KLL during the period, having acquired it in 2016. KLL had mainly served top-end retailers.
Barloworld represents brands such as Caterpillar, Avis, Budget, Mercedes-Benz, Toyota, Volkswagen, Audi, BMW, Ford, and Mazda. The company intends to merge these with its logistics business, which will cut costs and deliver synergies.
The group’s automotive division was hit by a 5.6% decline in revenue to R25bn, reporting that a marginally higher rental rate was offset by a decline in rental days, and lower used-car revenues.
“While logistics’ revenue and operating profit were down, the turnaround project is still on track and the merger of automotive and logistics creates a platform for innovation and the ability to extract further value from combined strategic sourcing opportunities,” said CEO Dominic Sewela.