Barloworld extends investigation into Russian subsidiary

Around potential export control violations.
Vostochnaya Technica's operations have been 'significantly reduced by sanctions and the prolonged geopolitical environment', largely because its market in the area 'has shrunk'. Picture: iStock
An independent investigation into potential export control violations by JSE-listed Barloworld related to sales of certain goods to its Russian subsidiary Vostochnaya Technica (VT) has been further extended to September 2025.
The investigation was launched in 2024, with Barloworld informing shareholders that it submitted an initial notification of voluntary self-disclosure to a US Commerce Department agency, the Bureau of Industry and Security (BIS), on 5 September 2024 regarding the potential export control violations the company was investigating.
Barloworld Group CEO Dominic Sewela said on Monday the company was disappointed to learn last year of the potential export control breach in its VT division and the investigation is ongoing.
'As announced this morning [Monday], BIS has granted a further extension from 2 June to 2 September, and we will keep you updated as we progress with that investigation.'
ALSO READ:
'Complex' investigation
Barloworld head of legal Sandile Langa said the extension is purely a function of the complexity of the investigation.
Langa said the investigation is being conducted by an independent forensic firm, which is working under the guidance of US legal counsel that had requested the company apply for the further extension on the basis of where 'we are in the progress of the investigation'.
'You must appreciate that the US authorities are not likely to have agreed to this further extension unless they were satisfied that the company was taking all the correct steps in the investigation,' he said.
Langa's comments were made during a briefing on Barloworld's interim financial results for the six months to 31 March 2025.
Barloworld is still the subject of a proposed buyout by a consortium led by Saudi Arabia's Zahid Group, which if successful will result in Barloworld delisting from the JSE.
Sewela said Barloworld's VT business has been significantly reduced by sanctions and the prolonged geopolitical environment, largely because the addressable market has shrunk in that area.
'At the current rate, we expect our operations in VT to trade towards break-even levels and to remain self-sufficient.'
Sewela said VT is close to break-even but the business is basically selling parts, which are not impacted by export control, and therefore the discipline is that you are able to sell these parts.
He said Barloworld is embarking on initiatives to try and make sure it does not lose its people in VT but stressed 'it is difficult to sell labour in a smaller addressable market'.
'Therefore, I'm not saying we will always remain profitable and hence we are giving guidance that as soon as we dip below that level, we will unfortunately be forced to take people out [of the business].
'The business is self-sufficient in terms of funding and there is more cash in that business than I would like us to have given – you can't take the cash out,' he said.
ALSO READ: Questions over new Barloworld's strategy
Interim results
Barloworld on Monday reported that group revenue declined by 5.8% to R18.1 billion in the six months to 31 March 2025, driven by a 36.8% decrease in revenue at VT and a 6% decline in Barloworld Equipment Southern Africa.
Operating profit from core trading activities improved by 1.3% to R1.48 billion from R1.46 billion, with the group operating margin deteriorating to 8.8% from 9.7%.
Excluding VT, the operating margin expanded by 0.3% to 8.8% from 8.5%.
Headline earnings per share slumped by 20.5% to 423 cents from 532 cents, largely because of the expected decrease in VT's trading activities from the impact of continuing sanctions in Russia.
Normalised headline earnings per share, which excludes VT, remained flat at 356 cents.
An interim dividend per share of 120 cents was declared, which is 42.8% lower than the interim dividend of 210 cents declared in the previous corresponding period.
ALSO READ: Barloworld CEO accused of conflict in potential buyout by Saudi-led consortium
Operating environment
Sewela said 2025 has been typified by volatility, uncertainty, complexity and ambiguity, with the world changing faster than ever in terms of economic shifts, global politics and climate changes.
'In such a dynamic environment, businesses such as ours, especially those in cyclical industries, need to look beyond short-term gains and prepare for long term resilient strategies,' he said.
Sewela said the trading conditions Barloworld operated in during the period were indicative of the market entering a lower cycle where commodity prices are subdued.
He said Barloworld's Southern African mining clients remain cautious about investment and are preferring to rent equipment from the group than to buy while the recovery in the construction sector is still in progress.
Sewela added that in Zambia, the copper mines in particular, have been spared by favourable copper prices.
He said Barloworld's equipment business in Mongolia continued to grow but at a slower pace.
Sewela said the 2024 optimisation actions at Ingrain are yielding the desired benefits, resulting in a lower fixed cost base and improved operating efficiencies.
He said Ingrain generated stable revenue, with lower overall volumes offset by inflationary price increases.
Turning to the outlook for the group, Sewela said the future effects of tariffs on Barloworld's business remain uncertain and the group is actively assessing the medium to long term implications of these tariffs.
'That said, we have consistently demonstrated our ability to successfully navigate volatility in the past by leveraging our key endowments and having a firm grip on what we can control,' he said.
ALSO READ: Now labour dept questions employment equity at Truworths, TFG and Barloworld
Buyout update
The initial buyout offer by the Newco via a scheme of arrangement was overwhelmingly rejected at a general meeting in February this year, triggering a standby offer that, among other things, is subject to at least 90% of eligible shareholders accepting the offer.
However, Newco has the right to waive the 90% threshold and proceed to acquire less shares from shareholders who have accepted the standby offer, with any decision on the waiving of the threshold extended and now expected by no later than 30 June 2025.
The Public Investment Corporation, which owns 22% of Barloworld's ordinary shares, in April this year announced that it had accepted the standby offer.
This article was republished from Moneyweb. Read the original here.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

The South African

11 hours ago

• The South African

Putin unveils Iran-Israel peace plan at global forum

Russian President Vladimir Putin held a press conference with international media on 19 June 2025, at the St. Petersburg International Economic Forum (SPIEF). Nearly 20 000 people from 140 countries attended the event. Vladimir Putin used the forum to talk about Russia's foreign policy, economic strategy, and global security issues. Putin pushed for mutual recognition of Israel's security and Iran's peaceful nuclear rights to resolve the Iran-Israel conflict diplomatically. He claimed that while Moscow is willing to facilitate dialogue, it will not set the terms. Russia sent recommendations to Washington, Tel Aviv, and Tehran, the Kremlin confirmed. Putin said Iran has not asked for military support. Putin emphasised Russia's economic partnership with Belarus while pointing to $50 billion in trade and joint ventures in aviation and microelectronics. In addition, he credited Belarusian President Lukashenko for keeping the vital industry intact despite Western sanctions. The SPIEF 2025 theme, 'Shared Values: The Foundation of Growth in a Multipolar World', underscored Russia's shift towards non-Western relationships. Russian President Vladimir Putin also met with South Africa's Deputy President, Paul Mashatile, and Indonesia's President Prabowo Subianto. Furthermore, Putin called the North Atlantic Treaty Organisation's (NATO's) claims of a Russian threat 'nonsense,' pointing to the alliance's high military spending. Russia insists Donetsk, Luhansk, Kherson, and Zaporizhzhia are part of the Russian Federation, a position Putin has maintained since 2022. To sum up, he questioned President Zelenskyy's legitimacy while expressing a conditional willingness to negotiate peace with Ukraine. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 11. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.

IOL News

a day ago

• IOL News

SPIEF 2025: Russia's pivotal role in a rapidly changing world order

Russia has held SPIEF annually since 1997, under the auspices of the office of Russian President, Vladimir Putin, who has attended every edition. Image: Alexei Danichev/Sputnik THIS week, Russia is hosting about 20 000 participants from more than 170 countries to the 28th edition of the St Petersburg International Economic Forum (SPIEF). The theme of SPIEF 2025 is: Shared Values: The Foundation of Growth in a Multipolar World. Russia has held SPIEF annually since 1997. It is held under the auspices of the office of the Russian President, Vladimir Putin, who has attended every edition of SPIEF. The business mega event is Russia's flagship programme, and crucially, it results in multibillion-dollar deals entered into by international businesses that participate with their Russian counterparts. SPIEF is regarded as one of the biggest and most important business masterclasses in the world. Last year alone, about 21 800 participants from 139 countries took part. A total of 1 073 agreements totalling Russian Rubles to the tune of 6 492 trillion were signed last year alone. In fact, SPIEF has grown so popular that Roscongress, the organisers, had to agree to a certain degree of online participation by those unable to physically be at the St Petersburg venue. South Africa's participation at this year's SPIEF was led by the Deputy President Paul Mashatile, accompanied by an eight-member ministerial entourage led by Parks Tau, Minister of the Department of Trade, Industry and Commerce. Business is represented by Elias Monage, president of the Black Business Council. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Attending SPIEF 2025, it is incredible to watch the daily camaraderie and general atmosphere of conviviality among throngs of business gurus and political heavyweights as they shake hands on hundreds of podiums and pose for photographs holding pictures of files depicting sealed deals. Roscongress Foundation, Russia's state-owned leading enterprise in charge of events and international partnerships development, explains as follows: 'SPIEF offers an unrivalled space for dialogue and forging business ties. It provides an opportunity to find partners with the aim of securing business growth in Russia and abroad.' Speaking to the media during one of the many briefings at SPIEF, Russian Foreign Ministry spokesperson Maria Zakharova highlighted the growing interest from Latin America and the Global South in general to forge tighter business ties with Russia. She elaborated: 'They see open opportunities. The European businesses have partially left, and American companies have been blocked from working with Russian partners for years. Now, they see the commercial benefit, the prospects, and the resource base to support these opportunities.' Furthermore, Zakharova said, the Global South was ready for true independence, seeking to diversify partnerships beyond one centre of power. 'A new era of equal, mutually beneficial relationships is emerging.' Also on the sidelines of SPIEF, President Putin met with his Indonesian counterpart, Prabowo Subianto. Apart from thrashing out the path for Indonesia to join BRICS+, the two leaders signed a declaration on strategic partnership and signed another agreement to create a $2.2 billion Investment Fund effective immediately. Indonesia is one of Russia's key partners in the Asia-Pacific region. 'Indonesia's inclusion in BRICS,' according to the Kremlin, 'will bring significant added value to the group's development. All nine current members of BRICS+ are present at SPIEF 2025. The Gulf regions are also visible, with their participation rapidly growing with every passing year. This year, Bahrain has been awarded the status of the 'guest of honour' at SPIEF. With Russia under Western sanctions over the last three years since the outbreak of the war in Ukraine, attention has sharply turned to the Global South bloc, which has steadfastly refused to join the West in its war with Russia. Also speaking at SPIEF 2025, Indian tycoon Sammy Kotwani, who is also the founder of Imperial Tailoring Company, said the thousands of businesses participating at the conference were largely guided by the same ethos, which is that 'Business is about profits.' He indicated the appetite to lead Indian businesses to invest in one of Russia's newest regions — Donbass. 'If there's an opportunity,' he said in an interview with Sputnik, 'Indian companies should look for where they can make money, whether it's in Donbass or Kaliningrad.' Also reporting in the Russian news outlet Sputnik at SPIEF 2025, journalist Ishteak Hamdani reflected on the past years of covering SPIEF, saying: 'Year after year, the forum continues to achieve great things. The participation has grown. Countries like Pakistan, Latin America as a whole, Africa and Asia are now fully engaged. It is clear that SPIEF is becoming more crucial for global dialogue and progress.' SPIEF undoubtedly serves as a catalyst for Russia to circumvent efforts by the West to isolate Russia. The airports are busy as normal, and even tourism, aided by visitors from the Global South, is booming. The shops are well-stocked with Russian-produced goods, signifying the value and importance of an economy that is largely self-reliant. During Q&As at various press conferences, curiosity over the Russia-West standoff creeps up, and how and when it is likely to be resolved. Alexander Stuglev, the chairman of the Board and chief executive of SPIEF, said that although he was reluctant to delve into political commentary, it was his considered opinion that relations with the West would require extraordinary effort to repair. He said the trust deficit had grown beyond measure, and in the meantime, Russians have readjusted their way of life to look away from the West. The growth of the Russian economy amidst the climate of Western sanctions, demonstrated by a stronger ruble, points to a better life after the West had left. Russia's gas pipelines, Nord Stream 1 and 2, which supplied oil and gas to Europe via Germany, had been lying in a moribund state since the sanctions. In fact, the Ukrainians had bombed Nord Stream 2, although no one has been held accountable so far. Gazprom, Russia's state-owned oil and gas company, says Europeans by Russian oil and gas behind each other's backs. But more openly, the EU member-states are known to buy Russian oil and gas via a third party in the form of India. The EU calls it 'Indian oil and gas', although India is not known to produce such products.

The South African

2 days ago

• The South African

Paul Mashatile highlights South Africa's role as chair of the G20

Deputy President Paul Mashatile has highlighted the importance of solidarity and collaboration in today's rapidly evolving global landscape. Delivering a public lecture at St. Petersburg State University, the Deputy President explained that South Africa's Presidency of the Group of 20 (G20) comes at a time characterised by geopolitical tensions and economic disparities. 'As we gather here today, amidst the tumultuous global crises characterised by rising geopolitical tensions, trade wars, unemployment, inequality, poverty, armed conflicts, and climate catastrophe, it has become very clear that the world needs solidarity now more than ever,' the Deputy President said on Thursday. Deputy President Mashatile arrived in Russia this week for a working visit aimed at strengthening economic and trade ties between the two nations. The visit focuses on enhancing economic cooperation between the two countries in sectors such as agriculture, automotive, energy, and mining industries, as well as cooperation in science and technology. Deputy President Mashatile's speech highlighted South Africa's role as the current chair of the G20 and its commitment to addressing pressing global challenges. South Africa's G20 Presidency theme: 'Solidarity, Equality and Sustainability' articulates the necessary principles of fostering a more inclusive global community. 'Only through exercising solidarity and identifying with each other's struggles can we do justice to the notion of international community or 'Ubuntu'.' Deputy President Mashatile reiterated the importance of global solidarity, urging those present to work together to create a more equitable world. 'We aim to capitalise on the prospects of globalisation while limiting its risks and ensuring that the benefits of economic progress and technological advancement are shared by all,' he said. He called for unity, adding that 'we must build upon that legacy and strengthen our cooperation in science, technology, research, and innovation'. Universities like St. Petersburg State University can play a pivotal role in bridging the priorities of BRICS, the African Union, and the G20. 'Our future lies in knowledge economies, and your institution is a natural partner in this effort,' Mashatile added. The country's second-in-command praised the university's Faculty of International Relations and the Institute for African Studies for their engagement with scholars across Africa. He extended an invitation for deeper collaborations with leading South African institutions, emphasising the mutual benefits that such partnerships could foster. The Deputy President highlighted the university's impressive legacy, noting that it has produced numerous renowned figures, including President Vladimir Putin and the Russian revolutionary Vladimir Lenin. 'The presence of so many renowned scholars, leaders, and diplomats here today is a testament to the university's continued relevance in shaping discourse on global affairs.' The Deputy President reflected on the historical ties between South Africa and Russia, expressing gratitude for the support received during the anti-apartheid struggle. Despite the prevailing geopolitical environment, he said South Africa is steadfast in its commitment to this course. '… And with our G20 Presidency, we possess a unique opportunity to influence the global discourse on critical issues.' The G20 has a significant role to play in fostering global cooperation, collaboration and partnership to achieve the Sustainable Development Goals (SDGs) of the 2030 Agenda. He announced the country's G20 Presidency will, through its four overarching priorities, seek to address challenges that stifle the ability of the Global South to achieve desired levels of growth and development. In addition, South Africa will take steps to enhance disaster resilience and response. The country also aims to ensure debt sustainability for low-income nations, mobilise financing for a Just Energy Transition, and seek to leverage critical minerals for inclusive growth and sustainable development. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.