SENS Note - 29 January 2014

  Barloworld -- trading update


The first quarter of the 2014 financial year has delivered a solid group performance, with overall trading results ahead of the prior year.

Equipment and Handling
Equipment southern Africa delivered a strong result for the quarter despite the ongoing slowdown in the mining sector in southern Africa. Higher than planned activity in EMPR (Extended Mining Product Range) and an improved performance in Angola has contributed positively to the result. After sales revenue also reflected pleasing growth compared to the prior year. The firm order book for southern Africa at December 2013 remains in line with September 2013, with the EMPR orders continuing to represent the majority of the order book.

In Russia activity continues to be impacted by the slowdown in coal mining. The firm order book has reduced slightly from September following the machine deliveries to Polyus. In Iberia activity remained subdued in the first quarter, however there are some early signs of improving economic conditions in Spain. The Global Power business has continued to expand and is benefitting from good growth opportunities across all lines of business. Barloworld Handling disposed of all the shares in its materials Handling business in the Netherlands in December 2013. The Agriculture business had a slow start to the year, while the Handling southern Africa business traded in line with expectations in the first quarter.

Automotive and Logistics
The Automotive and Logistics division has shown strong trading compared to the prior year across all the business segments. Rental days in car rental improved strongly on last year contributing to a good trading performance. Following supply disruptions in Motor retail operations in southern Africa new vehicles sales were marginally down, whilst used volumes increased on prior year. The Australian motor retail operations performed in line with expectation. Fleet Services is trading well ahead of the prior year.

Logistics has benefited from the contribution of Manline Logistics, with the southern African operations ahead of the prior year. Overall the logistics business continued to show improvements as a result of operational efficiencies and the disposal of the loss-making freight forwarding business in the Far East.

Balance Sheet and Working capital
In line with the historical trend working capital increased in the first quarter due to inventory deliveries over the period. This has contributed to higher net debt levels, however, gearing is expected to remain within our target ranges at the half year and full year.

Funding
In December 2013 the company issued three senior unsecured notes under the South African Domestic Medium Term Note programme. In total R1.541 billion was raised of which R714 million matures in 2018 and R827 million in 2020. R1.069 million of the total funds raised was priced based on floating rates. The funds raised will be used to finance growth and to improve the maturity profile of group debt.

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