Following the economic upsets caused by the pandemic and the ensuing lockdowns since 2020, services, trading and distribution group Bidvest has reported strong results for the financial year ended June 30, with an overall 13% year-on-year increase in revenue to R99.9-billion and a 23% increase in trading profit to R9.7-billion.

“2022 reflects a strong return to normal across the broad spread of the group's businesses. Travel and hospitality have picked up again and the forward-looking international bookings are very positive.

“Return to work – outside maybe the financial services sector – is largely complete. Our financial position is strong, with good funding capacity for growth both locally and offshore,” Bidvest chief financial director Mark Steyn said during the company’s year-end results presentation on September 5.

Headline earnings per share (HEPS) from continuing operations grew by 21.9% year-on-year to R14.42, while the total dividend for the financial year amounted to R7.44 a share, up 24% year-on-year, after Bidvest declared a final dividend of R3.64.

Six out of the seven Bidvest divisions reported positive trading profit growth off a base that had already rebounded significantly in the previous financial year from the impact of Covid-19.

Overall, the group reported a gross profit margin of 30%, down from 30.8% the year before, and a trading profit margin of 9.7%, which went up from 8.9%.

Strong trading profit growth was reported by the services South Africa and freight divisions, primarily on the rebound in tourism and hospitality-related demand, as well and robust maize export volumes handled.

Strong profits were also reported coming out of the branded products, commercial products and automotive divisions off already high bases. This performance was driven by healthcare business Adcock Ingram’s results, as well as market share gains and margin focus.

In services international, the offshore businesses performed well, while the local business performance remained solid.

However, the financial services division delivered “disappointing” results with an 8% year-on-year decrease in revenue and a 74% drop in trading profits.

The recovery of this division would represent a material uplift for the group in the coming year, Bidvest CEO Mpumi Madisa said.

She said strategies for the 2023 financial year had been set and that the board expected digital migration, optimised credit processes, fully resourced sales teams and entry into new niche markets to significantly improve the division’s results in the coming year.

However, other sectors remained strong.

“South Africa’s mining and agricultural sectors remain robust, and ongoing private sector investment as well as renewable energy projects, are contributing positively to demand, whilst local manufacturing and production capacity has normalised, showing increased activity,” Madisa said.

Bidvest’s overall strong performance was also evident in operational cash generation.

The group reported that growth was driven primarily by record bulk commodity volumes handled, as well as pharmaceutical sales, new-vehicle price and volume increases, a strong rebound in travel and tourism-related revenue, and full-year contributions from acquisitions concluded in the UK and Ireland in the latter part of the 2021 financial year.

The normalised HEPS, which excludes acquisition costs, amortisation of acquired customer contracts, deferred tax rate change and Covid-19 costs, grew by 24% to R16.60.

Normalised HEPS is the key measurement used by management to assess the underlying business performance.

Madisa said the robust operating and financial results were delivered despite several domestic and global crises, as well as rapid changes in demand.

She noted that the trading profit figures were similar to those reported before the 2016 unbundling of the group’s foodservice businesses before the pandemic.

“Cash flows from operating activities, excluding dividends and on a comparable basis, are almost R500-million higher . . . in a mere six years,” she said.

Moreover, the commercial products division generated a trading profit of more than R1-billion for the first time, which means that four out of the seven Bidvest divisions are now generating profitability of more than a billion rand a year each.

Overall expenses increased by 4.7%, while the group’s return on funds employed improved from 31.6% the year before to 37.6%. The return on invested capital amounted to 17.1%, up from 14.1% in the prior financial year.

Meanwhile, the inaugural international bond issuance served to diversify and extend the capital structure as part of Bidvest’s growth strategy.

"The considerable strength of our balance sheet remains a key enabler for the group and, over the past year, we have made further progress with our international growth ambition.

“This has added incremental value to stakeholders through scale in existing territories while also expanding the facilities management footprint into Australia, for the first time in our group’s current form,” Madisa explained.

Bidvest’s freight division has embarked upon increasing the capacity at terminals, with the board approving two projects – an inland liquefied petroleum gas terminal and multi-purpose tanks in Richards Bay, at a combined value of R1-billion.

Investments were also made into increasing the capacity of Bidvest’s factories, back-offices and inventory.

“While we acknowledge the precarious global macro-economic backdrop, rampant inflation and intensifying energy crises, we remain confident that our internal strategic alignment over recent years, our close management of operating costs, prudent cash conversion and capital allocation, as well as our focus on customer growth, care and retention, will yield good operating and financial results over the long term,” Madisa said.