Barloworld share price gaps higher on results and dividend offerings
In this article we highlight a strong set of results from Barloworld, a special dividend offering and how the share price is reacting to the news.
Barloworld FY21 results
Full year results released from the industrial brand management conglomerate Barloworld , have appeased short term investor sentiment, with gains from continuing operations pushing profit for the trading period more than 200% higher than in the prior years comparative.
A summary of the FY21 results (vs FY20) are as follows:
Revenue +23%
Earnings Before Interest, Tax, Depreciation, & Amortisation (EBITDA) +54%
Operating Profit +119%
Profit from continuing operations +235%
Loss from discontinuing operations -94%
Profit for the period +212%
The logistics and Motor Retail divisions account for discontinued operations, with a R388m net profit realised on the sale of the Motor retail business.
Operating profit improved significantly across all remaining divisions which include: Equipment South Africa, Equipment Eurasia, Ingrain, Car Rental and Leasing.
Free cash flow more than doubled to R6.6bn from R3.3bn in the previous year, while net debt for the group declined by 13%.
Dividend & special dividend offering
Barloworld has reinstated a full year dividend of R3 per ordinary share after FY20 saw the pandemic disrupted business retain earnings and not paying out a dividend. Shareholders of Barloworld will be further rewarded from FY21 earnings with a special dividend of R11.50 per share as the group returns to profitability.
Outlook positive
Barloworld’s equipment businesses in South Africa and Eurasia which made up nearly 70% of group operating profit (43% and 26% respectively, see strong order books leading into the new financial year. Equipment South Africa has already secured R3.22bn in sales for FY22, while Equipment Eurasia has secured $55m for the new financial year.
The groups Ingrain and Car Rental / Leasing business looks set to benefit from increasing levels of economic activity.
Barloworld – Technical Analysis
The share price of Barloworld has gapped higher following the release of it’s full year earnings. The gap higher if sustained into close suggests a short term continuation of the longer term uptrend in place. 15755 a historical resistance target from the move, while traders who are long might consider using a close below gap support at 13810 as a stop loss indication for the trade.
In summary:
- Revenue for FY21 increased by 23%
- Profit for FY21 increased by 212%
- The group has reinstated a full year dividend of R3 per ordinary share
- The group has added a special dividend offering of R11.50 per share
- Barloworlds order books for its equipment’s businesses in FY22 are off to a strong start
- The share price of Barloworld has gapped higher on the news, with 15755 a historical resistance target from the move
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