Barloworld’s Tongaat Hulett acquisition yields positive results
The company said on Monday that Ingrain (formerly Tongaat Hulett Starch) and another subsidiary, Equipment Mongolia, contributed 23% (R450 million, about US$32.2 million) to its total operating profit.
DURBAN, May 24 (ANA) – Barloworld’s acquisition of Tongaat Hulett Starch (THS), which was rebranded as Ingrain, has yielded positive results, according to the company’s latest financial statement, published on Monday.
Following the THS acquisition in October 2020, the company said on Monday that Ingrain and Equipment Mongolia, another Barloworld subsidiary, contributed 23% (R450 million, about US$32.2 million) to its total operating profit.
Barloworld’s group revenue saw an increase of 6.5%, with R28.6 billion from a previous R26.9 billion, for the financial year ending March 2021.
“The decisive actions taken in 2020 are beginning to yield positive results, as reflected in our strong set of results for the first six months of the financial year ended 31 March 2021.
“Our recent acquisitions delivered better-than-expected performance, with Equipment Mongolia and Ingrain contributing R3.4 billion in revenue (17% of total revenue),” Barloworld said in a statement.
Despite the outbreak of the Covid-19 pandemic which ravaged economies across the globe, Barloworld said that its revenue from continuing operations (R20.2 billion) remained unaffected.
The operating profit from continuing operations increased by 44.0% to R1.9 billion, the company said.
In an effort to reduce operational costs and maintain a steady cash flow, Barloworld said the group achieved a R1.2 billion reduction in costs compared to the prior period.
“We maintained a strong balance sheet and instilled intensive working capital management, with free cash generation of R4 billion (excluding the Ingrain acquisition of R5.3 billion) exceeding our expectations,” it said.
Following the Ingrain acquisition, group borrowings increased by R2.3 billion to R4.9 billion. This, from R2.6 billion at the close of September 2020.
“The increase was solely driven by the R5.3 billion Ingrain acquisition, which was partially paid down by cash from existing operations,” Barloworld said.
A dividend of 200 cents per share has also been declared.
Barloworld [JSE:BAW] is an industrial brand management company founded in South Africa more than a century ago. The company currently trades at around R100.50 per share, according to Moneyweb.
The company’s focus is on the industrial equipment, logistics, motor vehicle and, most recently, food and beverage industry. The board of directors, however, has approved a formal disposal process to exit the logistics business after receiving “several expressions of interest”.
– African News Agency (ANA); Editing by Yaron Blecher