Barloworld profits slide 21% amid export-control investigation
Key topics:
Revenue and profits fall sharply
Russia unit collapse and US export-probe woes
Cash flow, liquidity and gearing improve
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BizNews Reporter
Barloworld Limited, the industrial processing, distribution, and services company focused on Industrial Equipment and Services and Consumer Industries (Ingrain), has reported a substantial decline in financial performance for the year ended 30 September 2025. Although characterised as "interim results" in the request, the detailed figures reflect the company's full annual performance for the 2025 fiscal year.
The Bad: Declining revenue and profitability
The most significant negative trends for the year were evident in core financial metrics:
Revenue dropped by 10.0% to R37.7 billion, down from R41.9 billion in the prior year (2024). This corresponded with a sharper contraction in profitability, as operating profit from core trading activities fell by 20.9% to R3.0 billion (2024: R3.8 billion).
The downturn severely impacted shareholder returns, resulting in Group headline earnings per share (HEPS) of 810 cents, a decrease of 212 cents from the 1,022 cents reported in the previous year. Consequently, the board of directors elected not to declare an ordinary dividend for the year ended 30 September 2025.
Operational performance in the Equipment segment was largely responsible for the decline, with the Eurasia operations (Russia and Mongolia) facing severe pressure. Revenue from Equipment Russia plummeted from R4.238 billion in 2024 to R1.815 billion in 2025. The core operating profit for Equipment Russia similarly collapsed from R528 million to R94 million year-on-year. The Ingrain segment also saw a slight dip in revenue, moving from R6.507 billion to R6.350 billion.
A major regulatory issue also surfaced concerning the Russian operations. Barloworld submitted a voluntary self-disclosure to the U.S. Department of Commerce, Bureau of Industry and Security (BIS), regarding potential export control violations involving its subsidiary, Vostochnaya Technica (VT LLC). An internal investigation, concluded on 1 September 2025, identified apparent violations of the US Export Administration Regulations (EAR). Due to the uncertainty surrounding the outcome, management is currently unable to reliably quantify the financial impact of any penalty or sanction the BIS may impose. This issue was significant enough that the external auditors reported it to the IRBA as a reportable irregularity on 10 October 2025, though the auditors later reported that the irregularity was no longer occurring.
The Good: Cash flow strength and financial stability
Despite the significant drops in earnings, the group demonstrated improved cash generation and maintenance of strong financial footing:
Net cash inflow before financing activities significantly improved to R1.7 billion, compared to an inflow of R0.7 billion in the previous year. Furthermore, the group reduced its overall financial leverage, with the gearing ratio decreasing to 5.1% at year-end, down from 8.4% in 2024. The company also maintained ample liquidity, with unutilised bank facilities rising from R7.0 billion (2024) to R7.9 billion (2025).
The directors maintained confidence in the company's ability to continue operations, preparing the financial statements on a going concern basis. The external auditors issued an unqualified audit opinion on the consolidated and separate financial statements. Other key financial indicators remained stable; notably, the impairment assessment of the investment in Bartrac Equipment, a joint venture in the DRC, concluded that no impairment was necessary.
In a positive move aimed at enhancing future performance, Barloworld completed the sale of its Salvage Management and Disposals (SMD) business on 2 April 2025. This disposal is expected to eliminate recurring losses associated with the subsidiary, thereby improving future financial results.
Finally, post-year-end, the company announced that the Standby Offer made by Newco became wholly unconditional on 1 October 2025, involving the acquisition of all ordinary shares for a cash consideration of R120 per share. This transaction is expected to have a material impact on the group’s financial position and future strategic direction.