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Real Economy News in Real Time
R/€ = 15.93 Change: 0.01
R/$ = 13.46 Change: 0.02
Au 1243.94 $/oz Change: 6.10
Pt 891.17 $/oz Change: 13.67
 
 
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Barloworld board looks to improve capital allocated to leasing assets to improve returns

7th December 2017 BY: Schalk Burger
Creamer Media Contributing Editor

Earthmoving equipment and logistics multinational Barloworld’s board on Thursday announced that it was investigating the capital allocated to leasing assets to further optimise capital allocation into higher-returning opportunities.

Various options are currently under consideration in relation to the group’s vehicle leasing assets.

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“The group believes that by funding these assets more effectively, it will enhance its overall return on capital while creating opportunities for the businesses directly or indirectly involved in leasing activities [to] further capacity [and] pursue growth.”

The short announcement aimed at providing an update on the pursuit of the company’s strategic review. Specifically, Barloworld highlighted three key initiatives as part of this strategy aimed “to fix and address underperforming businesses, optimise returns from the existing portfolio and look at high-growth opportunities based on existing capabilities”.

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The new Barloworld group strategy was approved in March this year and  will take around 18 months to implement. The restructuring of Barloworld Logistics forms part of this.

Barloworld Logistics is currently the focus of a turnaround strategy under new divisional CEO Kamogelo Mmutlana, who took control of the business in March.

At the Barloworld results, in November, Mmutlana said the logistics business had reduced its debt levels in the period under review, while also generating positive cash flow.

The focus had been on collapsing similar businesses into a single structure, thereby also slimming down a bloated management structure. A job freeze had also been in place, with job losses likely to happen in the next few months.

“Growth is not the challenge, the cost base is,” said Mmutlana.

This strategy includes the sale of the Middle East logistics business, with Barloworld CEO Dominic Sewela expecting Barloworld to exit that business in the first quarter of the new year.

The sale of the Iberia equipment business should be completed by the middle of next year, noted Sewela.

Barloworld group revenue remained stable for the year, at R62-billion, as did operating profit, at R4.1-billion.

(Additional reporting by Creamer Media senior deputy editor Irma Venter.) 

EDITED BY: Samantha Herbst Creamer Media Deputy Editor
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