From Integrated Annual Report for the year ended 31 December
2023
Overview
Against the backdrop of unprecedented global demand for equipment, the Bell Equipment group achieved record sales
and production in 2023, which resulted in a rewarding outcome for the second consecutive year. We made great progress
during 2023 on a number of exciting new strategic initiatives, including new product developments, the launch of our contract
manufacturing division in Richards Bay and the growth of our independent forestry and agriculture product dealer network
across South Africa.
We are exceptionally proud of the Bell team as they continued to demonstrate resilience and adaptability through the year
and we commend them for the way in which they overcame considerable obstacles, most notably continued supply chain
challenges, as well as port congestion in South Africa and labour shortages in Europe.
Port delays, affecting both incoming supplier orders and outgoing customer shipments, coupled with higher logistics costs and
inventory buffers have impacted margins, inventory, debt levels, and return on invested capital (ROIC). Inventory levels remain
high due in part to the remote location of our Richards Bay factory in relation to a majority of our component suppliers and
customer base for our articulated dump truck (ADT) product line. The group also owns certain sales and distribution operations,
such as in South Africa (BESSA) and the UK, which results in a longer working capital cycle and greater investment in inventory.
We are implementing strategies that will, over several years, reduce our investment in inventory and increase the flexibility and
resilience of the business.
We place great value on our reputation of offering strong reliable support to our customers, and during 2023 we made a
significant investment in setting up our new American Logistics Centre (ALC), located in Charleston, South Carolina. This state of
the art 55000 square feet facility has been established to back up our North American growth ambitions and is testament to our
belief that if our customers succeed, then so will we.
Eskom electricity supply in South Africa remained a challenge through 2023, with the number of days where load shedding
was experienced increasing to around double that during 2022. Our South African based suppliers have contingency plans in
place for load shedding, such as alternative power sources, carrying more inventory, and flexible working hours to work around
periods of load shedding. However, these measures drive up costs and the overall impact on the local economy is a huge
concern.
We invested in solar power installations at both our Richards Bay factory and our Johannesburg sales and distribution facility.
Although this is a long term cost saving project, it offers significant operational advantages by reducing the generator running
costs and associated emissions that result from load shedding and municipality infrastructure failure.
We are pleased with the growth in revenue and profitability of 32% and 66% respectively, compared with the 2022 financial
year. Inventory and receivables were higher than planned at year end and this impacted on debt levels. Reducing the level
of investment in working capital is a priority as are our plans to reposition more ADT manufacturing closer to suppliers and key
markets, in time.
Operations and product development
During 2023 the geographic breakdown of revenue across
all products sold by the group was 48% into Africa (including
South Africa), 28% North America, 16% Europe and the UK,
and 8% Australasia.
The global demand for commodities translated into good
ADT demand in general from Africa, South East Asia and
Australia in mining. Further growth came from the USA,
and parts of Europe driven largely by the construction
sector, as infrastructure projects continued. The USA is the
world’s largest ADT market and remains the greatest market
opportunity for growth for our ADT business.
Demand for machines exceeded our ability to supply due
to constraints and logistical challenges in our supply chain,
which negatively impacted our market share in certain
markets. With market demand and supply chain pressure
normalising, we expect to recover some of our 2023 market
share losses going forward.
Infrastructure projects in the UK were either scaled back
or put on hold during 2023, which resulted in large fleets of
equipment being under utilised and unforeseen pressure in
this market.
Our small Russian operation has been on pause since
the outbreak of the Ukraine war. Although sales in Russia
previously only contributed approximately 5% of group
sales, our challenge is recovering restricted cash that we
hold on deposit in that country.
The aftermarket segment remains a critical aspect of our
business. The group’s ability to provide parts and service
support throughout the life of a Bell machine largely
determines repeat purchases by customers and provides
the group with a revenue stream for the life of the machine.
In 2023, the group launched Bell BETA (Bell Equipment
trusted alternative parts) in South Africa, a mid range
offering to bridge the gap between premium Bell parts
and remanufactured Bell components (ReMan). This gives
customers a wider range of options to suit their needs and
the assurance that comes from dealing with our dealer
network. Plans are in place to roll out BETA parts to Bell UK
and the dealer network in 2024.
