Chairman’s review

Dumisa Ntsebeza, Chairman
Dumisa Ntsebeza,

On behalf of the board, it is my privilege to present the 2018 integrated report.

The 2018 year has been one of change as the business continued to align itself to the principles of Managing for Value.

In a difficult context, it is pleasing to see this focus on delivery yielding positive results.

Chairman’s review

Chief executive’s

Dominic Malentsha Sewela, Chief executive
Dominic Sewela,
Chief executive
  • Disposal of Equipment Iberia generates R2.5 billion in cash
  • Logistics turnaround on track
  • Record Equipment Russia performance

It has been at least 20 months since we embarked on the redefinition of our One Barloworld strategy. In the 2017 report we outlined our key strategic levers and change journey. In the year under review we have continued to make good progress in driving execution and implementation of this strategy.

Chief executive’s review

Finance director’s

Don Wilson, Finance director
Don Wilson,
Finance director
R63.4 billion

2017: R62.07 billion

Operating profit
R4.4 billion

2017: R4.16 billion

In June 2018 the group announced the conclusion of the sale of its Equipment Iberia business. In compliance with IFRS 5, and as presented at the year ended 30 September 2017, the results of the Equipment Iberia operations and the profit on the sale of this operation have been reported separately as a discontinued operation. The following commentary reflects current year trends from the group's continuing operations unless specifically stated.

Finance director's review

Our service offerings

Barloworld is a distributor of leading global brands, providing integrated rental, fleet management, product support and logistics solutions. We offer flexible, value adding, integrated business solutions to our customers backed by leading global brands.

Core divisions

Cash flow:
R99 million outflow (2017: R1 337 billion)
Return on invested capital at
12.7% (2017: 12.8%)
Economic profit at
R47 million (2017: R46 million)
Operating profit at
R1 790 million (2017: R1 785 million)
Operating margin at
9.1% (2017: 9.8%)
Actions in managing for value
  • Improve returns in underperforming businesses above group hurdle rate
  • Reduce business process complexity and cost to serve through operational and digital transformation
  • Reduce rental book size from R2.5 billion to R2 billion and seek equity partner to double the rental business
  • Focus on growth in profitable product range and segment
  • Roll out operational excellence programme to sustain new discipline

View full Equipment Southern Africa

View full Equipment Russia

Cash flow:
R690 million (2017: R794 million)
eturn on invested capital at
12.4% (2017: 13.1%)
Economic profit at
(R5 million) (2017: R81 million)
Operating profit at
R1 701 million (2017: R1 747 million)
Operating margin at
5.7% (2017: 5.5%)
Actions in managing for value
  • Review and optimise portfolio
  • Address underperforming business units and segments as a key focus
  • Align with OEM footprint strategy and optimise returns for our OEMs and principals
  • Investigating alternative funding solutions
  • Drive intergroup synergies and provide integrated solutions offering
  • Digital platforms and toolsets to optimise solutions
  • Identify and pursue growth opportunities

View full Automotive

Cash flow:
R520 million cash generated (2017: R260 million)
Return on invested capital at
8.7% (2017: 2.5%)
Economic profit at
(R73 million) (2017: (R238 million))
Operating profit at
R262 million (2017: R101 million)
Operating margin at
4.4% (2017: 1.6%)
Actions in managing for value
  • Turn around the financial and operational performance:
  • Fit-for-purpose Selling General & Administration (SG&A) costs – align SG&A costs with the size and profitability level of the business
  • Optimal operational performance – improve the operational efficiency of the business
  • Procurement rebates/savings
  • Implement lean and customer-focused operating model to support future growth

View full Logistics