Everybody’s favourite producer of giant-tyre earth moving equipment has not been without its issues of late. Particularly galling was the discovery in the first quarter of 2016 of a properly decent-sized fraud in the Democratic Republic of Congo (DRC), which resulted in the entire local management team and a number of other employees being dismissed and required squadrons of legal and tax professionals to get the operation back on track.

Management shows great restraint in describing this as a "difficult market" when clearly there are some strong Anglo-Saxon terms that might have been employed instead.

The DRC shenanigans kiboshed what would otherwise have been an improvement in profitability year on year, and the group has focused on directing its efforts away from the moribund mining industry into construction.

Miners continue to count the pennies and sweat their assets to the maximum, with their mobile equipment fleets now at the oldest they have been for a dozen years.

This will clearly provide great opportunities for Bell when the pendulum starts to swing back to the pick-and-shovel brigade but, meanwhile, it is focused on reducing production costs and adding products and services to its distribution network so it can dish out decent results throughout the business cycle.

The group states rather alarmingly that it is so concerned about the rising cost of doing business in SA that it is considering shifting activity to its facility in Germany — further evidence of the need to be nimble footed when times are tough.

Vital numbers on September 26 2016

Share price (R)10.50
Market cap (Rm)999.04
P:e ratio8.84
Earnings yield (%)11.31
Dividend yield (%)1.43




This has been a tumultuous period for the diamond-mining junior, with a special board committee kicking off a strategic review to evaluate where Rockwell’s positioning should be within the diamond-mining sphere, and the performance it has achieved over the years in attempting to find its feet. This outbreak of navel-gazing resulted in the replacement of the CEO and a pretty comprehensive review of its operations and the way they were being run.

The new CEO, Tjaart Willemse, has unleashed a mighty broadside at what he has discovered, describing the descent of the company into what he calls "a state of despair". He cites a general breakdown of controls, nonadherence to the procurement policy, inadequate work planning, lack of project front-end loading, financial management concerns, blurred lines of accountability and a lack of a sense of urgency.

This appears to cover pretty much everything short of a plague of locusts, and it wouldn’t be too surprising if he unearthed one of those, given time.

The good news is that he says significant progress has already been made, and that with the right controls in place and the right team to execute the plan, Rockwell can be turned around and finally deliver value to shareholders. It has moved swiftly to contract out mining services, which should remove a layer of risk from its operating performance, and has suspended operations at Saxendrift, which previously provided much of Rockwell’s production. It’s been a bold and decisive intervention from the board, and the hope is that it will set Rockwell back on course.

Vital numbers on September 26 2016

Share price (c)150
Market cap (Rm)82.47
P:e ratio
Earnings yield (%)
Dividend yield (%)

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