Bell Equipment: Bogged down with grumpy shareholders
Mining and construction are deep in the sticky stuff, but can’t the company do more to boost returns?
Listening in to the annual general meeting of Bell Equipment last week was a fascinating if somewhat dissonant experience. At times it seemed the shareholders and board were referring to two different companies, so irreconcilable were some of the views being expressed.
Both agreed that the company produced excellent products and that the past few years had been tough, but the board said this was entirely down to the difficult trading conditions. It was difficult to disagree as Bell supplies heavy-duty equipment to the mining, construction and agricultural sectors. Mining and construction have been hammered in Africa, and particularly SA, in recent years. Things do look a bit more encouraging in Europe and America.
The differences were more distinct when it came to consideration of investments and strategies. The executives seemed adamant their strategies were to deliver returns, and making sure whatever investments being made were paying off.
The few shareholders who had made the effort to participate didn’t see things quite the same way. They contended the returns were on a several-year declining trend and that far too much capital was tied up in inventory. In particular the shareholders were worried about the increase in debt to unprecedented levels.
A lot of issues were discussed but no conclusions were reached before the 90-minute meeting was brought to an end. It felt like the first part of an engagement that is likely to have many parts.
The shareholders seemed as committed as the board to the company’s excellence. They produce world-class equipment and have an impressive global reputation for quality and service. But the yawning gap between the poorly performing share price and net asset value indicates the shareholders’ concerns need to be dealt with.