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September 15, 2008
BMG digs in to grow business in Africa
Survey: BMG Corporate Profile Mining industry supplier on track to meet ambitious targets, writes David Jackson A new corporate identity for Bearing Man was officially launched into the southern African market this week, reinforcing its status as one of the region’s leading engineering supply and services companies. Now known as BMG (Bearing Man Group), the new company image — complete with new name, branding and logo — was unveiled to the business community at the Electra Mining Africa exhibition in Johannesburg. The mining industry represents BMG’s biggest customer segment. “In 2007, we set ourselves a bold strategy of doubling our sales in five years. We planned to grow firstly organically, by selling more of our current product lines to both existing and new customers and, secondly, to grow by strategic acquisitions,” said BMG chief executive Charles Walters. In pursuit of these objectives, the group achieved R1.55-billion in sales during the financial year to March 2008. “We have been achieving turnover growth of 15% a year, which will see us reach our five-year growth target. The level of growth has also increased this year to date, which is highly encouraging,” Walters added. “Profit growth is currently around the 25% a year mark and BMG eventually aims to be within the top two suppliers in every industry segment in which it participates.” Walters worked for Anglo American for 16 years, initially as a mechanical engineer, working his way up to managing director of Mondi Sales International, based in Ireland. He held this position from 2002 to 2005 before joining BMG in 2006. The intentions behind BMG’s acquisition strategy were underlined by last month’s takeover of Goldquest for an initial R58-million, the first time the group has made a foray into the fluid power industry. In so doing, BMG bought the leading distributor for Eaton, a global player that is among the world’s top three hydraulic components companies. Walters explained that the acquisition could be seen as the first step in a series of envisaged future investments by BMG. “Critical though, is that we wish to grow Goldquest through their existing distributors for the present, and to supplement this through the BMG branches where Goldquest is not covered in a particular territory.” He believes that Goldquest will enter the market in about third position, “but we believe it could grow to be as high as one or two over time”. Walters explained there are currently two legs to BMG’s international profile. “We represent many leading engineering companies from around the world on all our product lines. In bearings and gearboxes, for example, we represent three of the top five global companies.” The second is BMG’s growing thrust into the rest of Africa, which currently accounts for 9% of total sales. “We see potentially high levels of growth and good margins on the continent, although obviously this comes with a certain element of risk,” said Walters. “We have a number of branches open in sub-Saharan Africa — three in Namibia, one in Botswana, two in Zambia and two in Mozambique — and we are considering options in other African countries .” BMG technical director Paul McKinlay emphasised that demand was being driven in large measure by the mining, sugar and oil and gas industries. “And its been very much our existing SA customer base, such as the global mining giants, that has drawn us to these areas. We have branches positioned strategically to support customers in these areas.” Further afield, McKinlay added, BMG is actively looking at securing a foothold in Ghana, given that Gold Fields and AngloGold Ashanti have extensive mining operations in that country. “We believe that there is considerable market potential for BMG in countries such as Ghana, particularly as in these robust or isolated environments, quality and range of products become paramount.” McKinlay said the company was by far the largest distributor organisation in its segment in Africa. “North of the Sahara there is a degree of European influence, but South African companies are largely better equipped, adaptable and experienced in dealing in sub-Saharan countries. “We feature on the global stage as well. Taking some of our key suppliers into account, we are positioned in their top ten distribution customers. This gives us a fair degree of momentum when we move into neighbouring countries, where we have been very successful with the branches we have opened to date,” said McKinlay. However, Walters pointed out: “Although the rest of Africa represents 9% of our total sales mix, the biggest potential remains in South Africa, in selling our full range of products to existing customers. This, coupled with strategic acquisitions, means that the growth outlook for us is very strong.” Within South Africa, mining is also the main driver of growth, followed by heavy industry which includes a large engineering-orientated customer base. The sales breakdown also includes the automotive and agricultural sectors (each representing 5% of sales). Walters believes demand for BMG’ s product range within the mining industry is definitely picking up. “There is a lot of project work being undertaken, not only in refurbishing existing mines but also in the opening up of new deposits. While we are participating in this project work, our main business stream is the after-market segment, which focuses on the replacement and maintenance of equipment. As long as the mines are operating — notwithstanding commodity prices — and physical production is taking place, our products will be in demand.” He pointed out that the amount of machinery installation in the mining industry has also increased rapidly. “This augurs very well for us over the next five years, because of the ongoing maintenance spend that will be required to keep this enlarged base of equipment in good condition.” |
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