Bell results rally on the strength of improved trading conditions
The interim results of South Africa's largest homegrown heavy equipment manufacturer, Bell Equipment, indicate that the company has enjoyed more positive trading conditions from most of its global markets in comparison to the same period last year.
Revenue increased by 11% to R3,4 billion (2016: R3,1bn), Net Profit After Tax was up by 86% to R119,6 million (2016: R64,3m) and Headline Earnings Per Share rose 78% to 119c (2016: 67c).
Commenting on global markets, Bell Equipment Chief Executive, Gary Bell, said the mining and commodity markets in South Africa, Australia and Russia have a positive growth outlook, with a slow recovery evident.
The UK and USA remain key markets with relatively stable sales given the significant political changes and resultant uncertainty over the period, while the European market has continued to show steady growth, which has benefited the Bell operations in France and Germany, in particular.
Bell also reported that the stronger Rand in the first half of 2017 affected turnover and margin in both domestic and export sales, and increased costs from essential product upgrades proved difficult to pass on to the market due to significant competitive pressure. "These two factors have affected profitability and are a key focus for management," he said.
At the same time, the company has kept expenses well in check and rung in numerous changes that are geared to better position the company going forward. "The E-series range of trucks, and in particular the new concept B60E and B20E LGP units, continue to garner positive reviews from users around the globe and will in time add additional throughput for our business," said Bell.
"The investment into our new European Logistics Centre has been completed and the facility is now fully operational. Significant improvements in customer service levels and a reduction in operational costs are beginning to flow through. Aftermarket sales and support to our existing customers remains a critical element of the business and resources are being channelled to ensure that we are best equipped to deliver on this important aspect of our business.
"In the South African distribution business a successful BBBEE transaction has been completed which will ensure our participation in all sectors of the economy. An important distribution agreement with Kobelco from Japan has been concluded, extending our offering of excavators with a broader and more competitive range of machines. Second half sales should begin to reflect this additional volume. Further opportunities for complementing product lines have been identified and programmes are in place to bring these to market and drive our growth plans for Africa and our Northern Hemisphere markets."
Our traditional mining markets north of the Zambezi continue to underperform as a result of both internal political issues and poor commodity demand, and restructuring and right-sizing continues in the Democratic Republic of Congo, Zambia and Zimbabwe.
Going forward Bell said the company will continue to invest in both additional products and in distribution opportunities across the globe. "The assessment of current distribution channels as well as the appointment of focused dealers in non-represented countries are priorities."
The group has completed a formal search process and in June announced its succession plans for a new CEO, with the appointment of Leon Goosen, the current COO, as the CEO designate. The plans allow for an extended handover, ensuring continuity for the business, and a date for the final appointment to the CEO position will be decided in due course.
In closing Bell said that Tiisetso Tsukudu has announced his retirement as an independent non-executive director from the Bell board after 13 years of service and the company would like to take this opportunity to thank him for both his dedication and significant input over the years.