Mixed results for Bidvest as acquisitions pave the way for future success

Bidvest’s international services, trading and distribution group operations reported mixed results from its various divisions, but “a great deal of execution went into the year” to June 30, and benefits from this will materialise in coming years, CEO Mpumi Madisa said Monday.

The group did 9 acquisitions through the year, concluding a two-year spate of 24 acquisitions and disposals. Madisa said in an online presentation they had executed almost all transactions in their proactively built pipeline, and the focus now was to ensure these businesses delivered on potential and generated strong cash flow. “We will be driving growth across all 11 territories,” she said.

The share price fell 5.67% to R223.46 on the JSE by yesterday midday, a price about 27% lower than the price a year ago.

Included in the acquisitions was Citron, which provided a platform for hygiene services growth in North America, Bidvest’s first entry into that market. The award of a new 25-year terminal concession in Richards Bay was announced, the value potential of which would be made available once the assets were built.

The group saw a stronger year-on-year performance in the second half, backed by good cash generation, and in spite of lower bulk commodity handling profits and renewable energy sales.

Group trading profit increased 0.7% to R12 billion, the results of growth from higher margin businesses, well-managed expenses, particularly in the trading businesses where demand was constrained, as well as the contributions made by acquisitions, said Madisa.

A final dividend of 453 cents per share increased 1.3% year on year. Normalised headline earnings per share from continuing operations grew by 0.9%.

Group revenue grew 4.9% to R126.6bn - revenue was flat on an organic basis. Acquisitions in the last six months included E-Group, a security service provider in Australia, and LK Products, a Cape Town-based distributor of outdoor cookware, gas products and related accessories.

In the Services South Africa division, the service and product offerings were expected to continue to drive business wins. The inbound leisure order book was strong, and the annualisation of lounge refurbishments and additional water purification capacity should support further growth. Further expansion in the TIC (testing, inspection and certification) sector was envisaged.

The division benefited from strong inbound leisure travel, increased airport lounge passenger volumes, strong water and coffee sales, coupled with an enhanced landscaping offering in the past year.

At Bidvest Automotive, insurance and vehicle inspection businesses were introduced, a used car operation was started and truck body building capability acquired, and the representation of eight new brands was secured. Collaboration to seek opportunities in the value chain was encouraging, as was the new product pipeline in insurance.

At Services International, new business wins would sustain growth. The integration of operations in Australia was gaining market traction. Synergies would be extracted from Citron. Investment in sales was set to continue in all regions.

In the Freight division, restructuring and business model transitions in select businesses and regions were complete and management was focused on growth. 

Modest maize export activity was expected, while bulk commodity volumes remained sensitive to global growth volatility. Capital investment in Namibia was expected to be complete by the start of the new calendar year.

In the Branded Products segment, product realignment, innovation and expansion remained focus areas with market share being pursued across all businesses. White label opportunities were being evaluated.

In the Commercial Products category, restructuring was completed in four businesses to align to demand. Work continued to introduce own-label products to offer price-sensitive customers alternatives in the plumbing and electrical segments.

Eight plumbing and 16 new King Pie outlets, respectively, were rolled out while two new warehouse facilities were opened. Low business confidence in the industrial, manufacturing and agricultural sectors, and low infrastructure development would make for challenging trading,

BUSINESS REPORT