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By Zandile Nkuta
JOHANNESBURG, Nov 14 (Reuters) - South African brand management group Barloworld Ltd posted a five percent drop in annual earnings on Friday, within expectations, but said it saw a better year ahead despite a strong rand.
Barloworld said new accounting methods and a stronger rand trimmed its gains as it must translate back its earnings, more than half of which are in foreign currencies, into the local unit when it reports profits.
The world's largest independent lift truck dealer has businesses in the United States, Europe and Australia, with interests including capital equipment distributors, auto-dealerships, construction and financial services.
"Macro-economic conditions are moving in our favour with lower interest rates having positive effect on the South African economy, the upturn in the United States improving markets for our U.S. businesses and a generally positive outlook for Europe and Australia," said Barloworld Chief Executive Tony Phillips.
"The company is in great shape and we look forward to making further progress in 2004," he added in a statement.
Headline earnings per share, which strip out exceptional items and their tax effects, were 593 cents in the year to September 30, 2003, compared with 622 cents in same period a year earlier.
A median of five forecasts from analysts surveyed by Reuters put Barloworld's expected headline earnings at 599 cents a share. The range was 547 cents to 612 cents. A Reuters Research consensus put the figure at 608.50 cents.
Barloworld shares on the Johannesburg stock market were flat at 62.35 rand in early morning trade in a broadly weaker wider market .
The firm said operating profit rose 19 percent to 2.5 billion rand ($370.6 million) from 2.1 billion rand previously while the dividend edged up five percent to 290 cents per share.
STRONG RAND HURTS
Barloworld said the overall impact of a stronger rand -- which has appreciated by about 27 percent so far this year -- was to decrease after-tax profit by 81 million rand.
The firm said it expected South Africa's falling interest rates to boost demand for most of its domestic products but warned of the uncertainty of the volatile rand, saying a stable currency even at current exchange levels would be beneficial.
"Improved results in local currency terms were achieved in depressed markets in both the industrial distribution and scientific businesses, which operate primarily in the United Kingdom and United States," Barloworld said.
Barloword said in the year under review it had acquired an additional Freightliner truck dealership in the United States and a materials handling business in the UK.
It also increased its stakes in lime and cement subsidiary Pretoria Portland Cement Company Limited (PPC) and Avis Southern African motor leasing book (Avis) to 67.4 percent and 34.7 percent respectively.