BARLOWORLD is targeting six sectors to boost the growth of its business, and is positioning itself "to expand into west and east Africa", according to CEO Clive Thomson.
While the diversified industrials company has continually expanded its operations outside of South Africa, its African growth has tended to focus more on countries south of the Democratic Republic of the Congo.
In results released this week, in which it reported a strong 26% rise in headline earnings per share for its year ended September, Barloworld emphasised its strategy to reallocate capital to "higher return opportunities" over time.
Mr Thomson said the company’s six "strategic growth segments" were mining, infrastructure, power, automotive, logistics and agriculture.
Recent acquisitions under this strategy include the mining equipment division’s takeover of the Bucyrus distribution businesses in Southern Africa and Russia, and some "niche" logistics acquisitions.
"We have also taken our Avis Fleet Services business into Ghana in west Africa, and we’re looking at an acquisition opportunity at the moment in east Africa for that fleet services business," Mr Thomson said.
He said while Barloworld’s logistics business was traditionally focused on South Africa, it was following the expansion of its customers into the rest of Africa.
While logistics was "one of the biggest challenges in Africa", he said the sector provided opportunities for those able to provide solutions.
Mr Thomson said Barloworld "set our target on the existing territories where we operate" for further growth, given "natural synergies" with established businesses.
While most of the company’s growth would come from southern Africa — including Zambia, Angola, Mozambique, Malawi, Namibia, Botswana and South Africa — "we are, however, positioning ourselves to expand into west and east Africa".
"Although we don’t have a strong presence there today, we do see the importance of having a presence in those regions. And of course Russia, where we have a strong presence on our Caterpillar equipment side and we have recently taken our agriculture business there, for example," Mr Thomson said.
He said about one-third of revenue from Barloworld’s equipment and handling business now came from outside southern Africa, while about 15% of revenue from automotive and logistics operations were from outside the region.
Barloworld’s strong results were achieved despite a wobbly global mining sector and South Africa’s construction industry remaining fairly stagnant.
Mr Thomson said while many mining companies were holding back on new capital investments, much of Barloworld’s mining equipment was focused on parts and services, which benefited from ongoing maintenance of existing mining operations.
Meanwhile, Barloworld’s Equipment Iberia operations, which have recently suffered under a weak construction sector in Spain, reported a substantially reduced loss in the year "and we are quite confident that that will move into profits in 2014", Mr Thomson said.
Although the external environment was likely to "remain quite tough", he said Barloworld was confident that through internal efficiencies and organic and acquisitive growth, "we should still have a year where we improve our operating performance".
