Barloworld to chop greater than 2 500 jobs

Greater than 2 500 individuals within the automotive and logistics divisions of JSE-listed distribution group Barloworld are to be retrenched due to the impression of Covid-19.

Barloworld Group CEO Dominic Sewela on Tuesday additionally confirmed the group might be exiting the logistics enterprise and has put the automotive enterprise “underneath enterprise evaluation”.

Sewela stated the target of the retrenchments is to understand a saving of between R700 million and R720 million, earlier than implementation prices, for Barloworld’s 2020 monetary 12 months.

Implementation prices within the 12 months are estimated at between R270 million to R300 million, he stated.

The deliberate job cuts by Barloworld comply with Motus, the automobile enterprise of Imperial Holdings that was unbundled and individually listed on the JSE, final month reporting it’s within the strategy of lowering the scale of its workforce by about 2 000 individuals by an early retirement and retrenchment course of due to the impression of Covid-19.

Learn: Job losses and site closures hit retail motor sector

JSE-listed Mixed Motor Holdings (CMH) final month stated its workers complement has been lowered by 15% and an extra 15-20% discount is anticipated over the approaching months.

Sewela stated Barloworld might be placing processes in place to discover a manner of guaranteeing it realises worth for the logistics enterprise “given the truth that we now have hung out fixing this enterprise”.

Alternate options for automotive

He stated placing the automotive enterprise underneath enterprise evaluation means they are going to be alternate options for what to do with the enterprise.

“I might be presenting to the board and replace the market [on this] once we launch the outcomes to end-September,” he stated in a presentation on Barloworld’s monetary outcomes for the six months to end-March.

Sewela stated it has been a really troublesome and difficult setting, not solely from a enterprise perspective however at a private stage and the impression on the workers psychologically.

“Covid-19 has put into sharp focus problems with sustainability,” he stated.

Sewela added the difficult buying and selling situations skilled previous to Covid-19 are anticipated to accentuate within the second half of the group’s monetary 12 months however Barloworld is effectively positioned to face up to these challenges.

Logistics exit overdue

An analyst stated the truth that Barloworld is exiting the logistics enterprise is indicative that the enterprise has not been fastened and questioned why it didn’t shut it and public sale off the vehicles.

“There’s overcapacity in that trade and they aren’t going to get somebody to purchase it whereas it’s making these kind of losses.

“The worst continues to be to come back. The March monetary outcomes solely had a number of weeks of Covid-19,” he stated.

From R950m revenue to R1.5bn loss

Shares in Barloworld slumped 11.5% on Tuesday to shut at R69 after the group reported a lack of R1.53 billion within the six months to March from the R950 million revenue within the earlier corresponding interval.

Normalised headline earnings per share from persevering with operations dropped 32% to 354 cents from 521 cents within the prior interval.

Group income was 12% decrease at R25.2 billion whereas working revenue deteriorated by 28% to R1.1 billion.

Tools Southern Africa’s working revenue dropped 10.four% to R722 million whereas Tools Russia improved its working revenue by 17.eight% to R370 million.

The working revenue of the automotive buying and selling enterprise slumped by 69% to R85 million and that of the automobile rental enterprise by 31% to R194 million.

The logistics enterprise reported an working lack of R30 million in comparison with an working revenue of R68 million within the prior interval.

Barloworld automotive and logistics CEO Kamogelo Mmutlana stated the working setting has been characterised by common financial deterioration throughout all of their market segments and enterprise items at various ranges, with some extra affected than others.

Mmutlana stated the enterprise has a excessive fastened price base and the Khulu Sizwe black financial empowerment (BEE) property sale transaction meant it incurred rental or lease price will increase of about R85 million.

He stated goodwill has been impaired by R690 million due to lowered forecast money influx arising out of the Covid-19 impression on the enterprise.

He stated the damaging impression of Covid-19 already skilled within the months of April and Could have been fairly evident however they see alternatives going ahead throughout the used automobile market on the again of recent automobile worth will increase which have already been introduced.


Mmutlana stated “effectively in extra of two 500 positions” might be affected total within the automotive and logistics division due to retrenchments and downsizing.

“In Avis and Funds Hire a Automotive, we’re concentrating on between 50% and 60% of the full worker base.

“We’ve got already initiated a Part 189 course of, we’re at the moment in session with our numerous unions and are how finest to provide you with an answer that works for all events involved.

“When it comes to motor retail, at this cut-off date we’re concentrating on 30% of the full worker base. Within the logistics enterprise, we’re roughly one other 30% minimize. We’re concentrating on a head workplace discount of about 47%,” he stated.

Website closures

Mmutlana stated the rationalisation of the dealership portfolio is underway, which can lead to numerous dealership closures whereas additional rationalisation of the automobile rental department community will outcome within the closure of not less than 26 of the 90 branches.

“We can even have a look at the consolidation and attainable exit of leased properties in favour of owned properties the place possible,” he stated.

The analyst stated that with the properties Barloworld had put into the BEE deal, it isn’t that simple “to unscramble the egg”.

Learn: Barloworld launches Khula Sizwe public BEE offer (Apr 2019)

He claimed the BEE deal was enrichment fairly than empowerment and questioned which of the websites might be closed down, including he doubted will probably be any of the properties that shaped a part of the BEE deal.

“There’s a battle of curiosity there. Are they going to behave in the very best curiosity of the corporate or the very best pursuits of the BEE deal?” he requested.

On the automobile rental defleet plans, Mmutlana stated they had been already on the peak of their cycle by way of fleet measurement on the finish of March with about 27 000 autos, however within the two to a few weeks earlier than the top of the month managed to defleet by about 5 000 autos “as quickly as we turned conscious of the intense impression of Covid-19”.

Rental fleet reductions

Mmutlana stated they’re concentrating on to scale back their automobile rental fleet additional to about 10 000 autos by February 2021 and have a transparent plan of easy methods to go about promoting these explicit autos.

He believes the residual values of those autos will maintain up on the again of recent automobile costs which might be already in impact.

“Nevertheless, we’re fairly cognisant of the impression of increasingly used vehicles volumes coming into the market, which can soften residual values considerably,” he stated.

Southern African Car Rental and Leasing Affiliation (Savrala) GM Sandile Ntseoane stated there are greater than four 000 individuals employed within the automobile rental trade however the complete variety of job losses due to Covid-19 is troublesome to find out as a result of some Savrala members hold these numbers “near their chest”.

Ntseoane stated a few of these jobs might be recouped when the tourism and journey sector returns to regular however confused no person is aware of when that may occur as a result of plenty of re-engineering is happening.

“My evaluation is that plenty of the harm is sort of everlasting,” he stated.

“Even when airways begin working once more, individuals might be very uncomfortable to journey as a result of Covid-19 appears to be coming again in some nations.”