The acute shortage of foreign exchange in Zimbabwe had put “significant constraints on the normal operation” of cement company Portland Holdings (Porthold), making it impossible for its management to “exercise effective control over the business,” industrial group Barloworld said yesterday.
Speaking at the announcement of Barloworld’s results for the six months to the end of March, company CEO Clive Thomson said lack of access to foreign currency had affected the Zimbabwean company’s ability to import components for the maintenance of its infrastructure.
As a result, Porthold continued to be excluded from the group’s results.
“Severe restrictions are placed on our ability to access foreign currency and remit funds. As a result, the investment continues to be accounted for on a fair-value investment basis, with dividends recognised only to the extent that they are received,” Thomson said.
He said the shareholders of Pretoria Portland Cement (PPC), a division of Barloworld earmarked for unbundling, would decide the future of Porthold after July.
The unbundling of PPC, expected to be implemented on July 16, would result in the shares of the company being distributed to the current shareholders. The cement producer would remain listed on the JSE.
After it was unbundled, PPC would take on black economic empowerment partners. This was expected to happen this year.
Further empowerment transactions were planned for Barloworld and for its painting business, Coatings, before the end of this year.
Thomson said the unbundling of PPC and Coatings formed part of Barloworld’s strategy of disposing of non-core operations to enable it to focus on its equipment, motor, logistics and materials-handling businesses.
Other measures intended to streamlining the company included the sale of at least five non-core business units with a net asset value of R3,4bn. About 50 jobs would become redundant.
Barloworld said it was pleased with the performance of all its business units, including those earmarked for unbundling.
Operating profit rose 25% to R2,2bn on the back of a 30% surge in revenue of R24,3bn.
Net profit for the period under review rose to R965m from R905m.
Headline earnings a share were up 14% to 467c and the company had proposed an interim dividend of 175c.
Growth in construction and mining was partly responsible for Barloworld’s improved performance.
The demand for heavy-duty equipment was largely driven by developments in SA, Iberia, Siberia and the Democratic Republic of Congo.
“The mining industry is investing in new capacity with significant new orders placed for Caterpillar equipment,” Barloworld said.
Barloworld said its heavy-duty equipment and vehicle retailing divisions contributed a combined R15,3bn to its revenue. Other major contributors were cement, with R2,6bn, Coatings, with R1,7bn and logistics, with R701m.
“We are in a strong position to capitalise on favourable trading conditions in each of our chosen business segments,” said Thomson.