UPDATE 2-S.Africa's Barloworld warns of slowing mining demand

Mon Nov 19, 2012 8:45am EST

Related Topics

* Diluted headline EPS at 675 cents vs 461 cents

* Consensus: 674 cents -Reuters data

* Expect lower demand for mining equipment

* Shares jump more than 3 percent (Adds quotes, background, shares)

By Tiisetso Motsoeneng

JOHANNESBURG, Nov 19 (Reuters) - South Africa's Barloworld warned of weakening demand for mining equipment on Monday as wildcat strikes at home and stalling growth in China force miners to scale back capital expenditure.

But the company said its car dealerships, logistics and forklift businesses would take up the slack, helping it deliver even higher growth in 2013 after a forecast-beating 46 percent profit rise this year.

Barloworld, the biggest dealer of Caterpillar earth-moving equipment in southern Africa, is a barometer for the health of the region's vast mining industry.

It said its order book for heavy-duty mining equipment in southern Africa plunged 25 percent to 3.9 billion rand ($438.51 million) at the end of September.

Production at many South African mines - particularly in platinum and gold - has yet to recover after a wave of wildcat strikes this year that marked South Africa's deadliest labour unrest since the end of apartheid in 1994.

The industry is also grappling with weaker demand for commodities due to slowing growth in China.

"We have seen mining companies across the world pulling back on capital expenditure because the costs are too high, projects are becoming complex and take longer to complete," Barend Ritter, a portfolio manager at Sanlam Investment Management.

But Barloworld also expects demand for heavy-duty equipment to hold up in other southern African countries such as Mozambique, where enough gas to supply Germany, Britain, France and Italy for 13 years was discovered recently.

Barloworld said headline earnings per share totalled 675 cents in the year to end-September, just above a 674 estimate in a Reuters poll of 10 analysts.

Headline EPS, the main measure of profit in South Africa, strips out certain one-off items.

"We are confident that the business has the momentum to exceed this performance in the year ahead," Clive Thompson, Barloworld's chief executive told Reuters.

Much of that growth would come from its auto sales and forklift businesses, he said.

South Africa's total new auto sales rose 10.5 percent year-on-year in October, boosted by record-low interest rates.

Shares in Barloworld jumped 3.4 percent to 75.56 rand, its highest in nearly two months and outperforming a 0.6 percent gain the JSE All-share index. ($1=8.8937 South African rand) (Editing by David Dolan and Mike Nesbit)

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