By: Irma Venter
10th August 2011

Capital equipment manufacturer Bell Equipment on Wednesday reported a healthy jump in profit to R115.2-million for the first six months of the 2011 financial year, compared with R10.7-million for the same period last year.

Earnings a share stood at 109c a share, compared with 9c a share.

Revenue for the six months ended June 30 was R2.14-billion, up from R1.5-billion in the comparable period last year.

The JSE-listed group said there were three major contributors to the "significant improvement" in profitability, namely a 43% increase in sales, an improvement in gross profit margins from 21.6% at June 30, 2010, to the current 23.2%, and a reduction in the interest on borrowings by 75%, to reach R8.9-million for the period under review.

Bell reported that it was "pleasing to advise shareholders" that the company had shown a "sizeable improvement in profitability", adding that this was expected to continue in the second half of the financial year, on the back of a full order book.

The group noted on Wednesday that the US and Eurozone debt crises suggested that global markets were going to take "years rather than months" before they emerged from trouble. However, it added that the company benefitted from such times, as they led to an increasing demand for commodities and, subsequently, products servicing the mining industry.

Sectors which remained active included territories in sub-Saharan Africa where the mining and agricultural industries had experienced a strong rebound, as well as Australasia's mining sector.
Bell had increased production at its South African and German plants to cater for this demand, with an additional 1 000 people employed over the past 12 months.

Both facilities were running at 75% capacity, bringing production and employment levels close to the company's prerecession position.

However, it had not been all plain sailing, as the supply of production materials, including castings, tyres and hydraulic components, had been challenging for the first six months of the financial year.
The next few months would see Bell introduce some new products to the market, with the company signing a distribution agreement with Liebherr to sell excavators into Africa and South Africa.

These machines would be launched in September and were expected to increase Bell's revenue during the second half of the 2011 financial year.

Edited by: Creamer Media Reporter