Bell delivers solid performance on the back of strong demand for ADTs

Published: 31 March 2023

JSE-listed Bell Equipment (Bell), a leading global manufacturer, distributor, and exporter of a wide range of heavy equipment for the construction, mining, quarrying, sugar, and forestry industries, today released final results for the year ended 31 December 2022.

Leon Goosen, CEO of Bell, said that increased demand for commodities, country-specific post-COVID-19 stimulus packages, and increased infrastructure spending in several markets had driven demand for ADTs in particular.

“The conflict between Russia and Ukraine since February 2022 caused ongoing supply chain constraints following the lingering effects of COVID-19, resulting in us having to cut back on production. While we mitigated these challenges well by closely managing high-risk suppliers and putting supply continuity interventions in place, it did prevent us from fully capitalising on the market conditions,” he said.

Goosen added that an improvement in the supply chain in the last quarter of the year meant that Bell was able to catch up on production and that product was both invoiced and delivered to customers by the end of 2022. “This ensured that we closed the year much more strongly than we did the first half of the year,” he said.

In addition to supply chain constraints, 2022 was marred by soaring fuel prices, unprecedented levels of inflation and interest rates, record load shedding, and floods in KwaZulu-Natal in April that caused logistics challenges. Reduced vessel frequency increased the need to use significantly more expensive air freight.

Eskom’s long-term implementation of extended load shedding during 2022 also had far-reaching effects on Bell, local suppliers, and customers. “Besides the disruptive impact on business, the mitigation action of running generators significantly increased the cost of doing business in South Africa. Power interruptions and changeovers also increase the risk of equipment being damaged, especially electrical switching and electronic equipment.”

Goosen said that to further mitigate load shedding, the group is increasing production at its factory in Germany, investigating the feasibility of sourcing fabrications from outside of South Africa, as well as installing a grid-tied solar system for the Richards Bay factory.


Financial review

The group improved significantly on the 2021 results, with profit after tax increasing by 63% to R478,9 million (2021: R294,3 million). Strong market conditions resulted in all regions surpassing  the previous year’s volumes. Group sales were up by 28% on 2021 largely due to an improvement in the supply chain in the last quarter that meant that production could be caught up and products invoiced and delivered to customers by year end.

Higher production volumes resulted in an increase in labour and overheads recovered, positively impacting the bottom line.

Notwithstanding freight and load shedding expenses already mentioned, other notable expenses include increased electricity charges due to higher production and electricity tariff increases.

Group inventory increased by R1,1 billion (31%) from December 2021 to R4,8 billion at the end of 2022 reflecting the high level of actual and planned production.

Recognising the improvement in the financial results, the board has declared a gross final dividend of 90 cents per ordinary share.


Operational update and product development

South Africa experienced a positive year, with favourable commodity prices fuelling demand in the mining industry. “The JCB product line is proving to be extremely complementary to the South African offering.  The market has reacted positively to the group taking over the distribution and support for this great product range,” said Goosen, adding that in Bell’s major international markets – the US and UK – demand was strong despite high levels of inflation, increased interest rates and soaring energy costs. Australia and New Zealand also maintained a high demand for ADTs.

“Our OEM business was restructured into three distinct divisions: Mining and Construction, Forestry and Agriculture, and Underground Mining to provide a more dedicated focus on product lines, distribution, and support going forward. Pleasingly, we have also started distributing JCB Agriculture alongside the Bell Forestry and Agriculture range and over a dozen independent dealers have been appointed as part of our strategy to grow our exposure in these industries through increased products and improved service,” he said.

He added that underground mining has been identified as another opportunity for growth. “The two underground articulated dump truck models and a rock scaler have been well accepted in existing African markets for their built-in levels of safety, use of the latest technology and economical productivity. This range will be expanded to include a 6-ton low profile Load Haul Dump (LHD) loader.”

Goosen was proud to elaborate on innovation at Bell, saying that four years after commencing extensive testing, the group’s autonomous technology is now at the adoption stage with customers in the UK, South America, and Australia set to introduce autonomous Bell ADTs on their worksites during 2023.

“We currently have two approved service providers, xtonomy, based in Europe, and Pronto AI in the US, both of which can work with Bell customers from anywhere in the world. A third supplier has recently been engaged and the group will begin testing this system during 2023.”

In addition, Goosen announced that the group has decided to enter the global motorised grader market. Final testing and refinement on its first generation of motor graders are underway, with production set to begin as early as Q4 2024. This is a significant step in the group’s strategy to grow its product development IP, increase its manufactured product offering, and expand global markets.

“Motor graders complement the group’s flagship ADT product as a core earthmoving product. There are several shared global markets and dealer distribution channels. Significant design complexity as well as developing to the needs of the operator are key for this product line and the group has demonstrated ability to achieve these,” he said.

Three base machines will initially be offered, each with the option of a four- or six-wheel drive configuration. The G140 will cater for maintenance and light construction tasks, while the G160, with its increased power and performance, is designed to handle heavy construction applications. The G200 is positioned as an entry-level machine for the mining industry.



From a production perspective, the volume outlook for 2023 is strong, work in progress has normalised and supply chain issues should not be a major constraint in the second half of 2023.

Goosen indicated that the order book is being maintained at record levels and the group is already taking orders for 2024. Finished goods inventory levels are low for current demand and are expected to remain low due to the strong order book. “In South Africa, we anticipate some improvement in the construction industry as the recent SANRAL awards have created optimism and are positive for the country.”

He said that Bell would continue to engage and work with the government, but that the cost and ability to do business in South Africa is a serious concern. “The cumulative effect of the challenges that local businesses must grapple with needs to be weighed up when considering strategies for long-term sustainability. These include exchange rate volatility, fuel prices, rising inflation and interest rates, escalating electricity tariffs, a severely encumbered national electricity provider, growing structural challenges around water and sanitation, and road infrastructure and port inefficiencies that frustrate logistics.”

In closing, Goosen added that while Europe and the US have started 2023 very well, the group needs to exercise caution given the banking crisis in the US and macroeconomic indicators, most notably subdued economic activity and high inflation levels and interest rates, signalling possible recession.