JSE-listed foodservice multinational Bidcorp's 25 000 employees deserve the credit for a “phenomenal job” during the financial year ended June 30, during which net revenue increased by 28.2% to R147.1-billion, CEO Bernard Berson said on August 24.

“Credit to a superb team that has performed against seemingly impossible odds at times, and delivered our best-ever performance,” he said in a presentation of the company's results.

Berson said many of the company's technology initiatives were driven by its generally young management teams.

“Our e-commerce and digital strategy remain key enablers of competitive advantage and are designed to facilitate digital customer interaction in a low-cost but high-impact way. Our technology solutions continue to drive innovation in our businesses.

"We are committed to ongoing investment to develop our technology and data capability to assist driving our growth strategy forward,” he said.

Bidcorp's headline earnings a share increased by 77.1% year-on-year to R15.38 and earnings a share by 56.2% to R14.44. 

Group trading profit increased by 58.5% to R7.6-billion and the trading profit margin achieved was 5.2%, up from 4.2%, which was comparable to those achieved pre-pandemic.

The company declared a final cash dividend of R4 a share, giving a total dividend for the year of R7 a share, which was 75% higher than the prior financial year. This represented about 2.16-times headline earnings a share cover, which was in line with group policy.

“It has been a difficult year and this year's results are compared to those achieved in 2021, which was not a normal year. A better comparison is with 2019. In 2022, we have surpassed our 2019 performance despite the impact of localised lockdowns, Russia's invasion of Ukraine, supply chain disruptions and global inflationary challenges,” Berson said.

Additionally, while the company had seen strong growth come through during the latter part of the financial year, its operating margins had recovered to those achieved during 2019 for the full year, he added.

“We were surprised by the customer rebound during the second six months of the financial year, and particularly in the final quarter. The consumer rebounded with great strength, with spending and travelling increasing, and spending has sprung back to above normal in a relatively short period,” he highlighted.

Despite Bidcorp struggling to find people around the world to work in the business, particularly in warehousing and distribution roles, the business performed remarkably well and was probably in a stronger position that it was in 2019, Berson noted.

“The pandemic gave us a chance to make some changes, some of which may have otherwise been difficult to implement. Further, we fortunately retained the bulk of our workforce throughout the pandemic so that, when the market did bounce back, we had the people in place to meet the demand,” he said.

“Despite the difficulties faced, our teams did a tremendous job of seizing the opportunities that circumstances presented to deliver a record trading performance,” Berson reiterated.

The company's exposure to major catering institutions located in large capital cities had been reduced in recent years. Non-discretionary demand from hospitals, aged care, prisons, military, and government departments was stable, he noted.

Further, Bidcorp continued to invest in infrastructure - specifically real estate and physical infrastructure. The correct location was important, as the company needed to be close to its customers and had a philosophy of not being more than about 30 minutes travel time away from the bulk of its customer base in an area, he highlighted.

“We far prefer to be the owner rather than a renter, and the right location is a critical component of what we do. With our balance sheet, we have the capability to be the owner of our properties. We own about three-quarters of the facilities we operate out of, which we view as a strategic advantage,” Berson stated.

Meanwhile, Bidcorp had also exited its businesses with certain customers, including in Belgium, New Zealand and Australia. These customers were profitable for the company and did contribute to profits, but only a small amount.

The company redeployed the capacity freed up by exiting these businesses. Its people are a scarce resource, as it cannot easily find drivers and warehouse staff, and this additional capacity was quickly filled. For example, the company exited from work for a customer in Belgium and the gap was filled by the end of July, he highlighted.

ESG INVESTMENT
An important element of Bidcorp's investment relates to its environmental, social and governance (ESG) credentials, said Berson.

In 2018, the company set a target of reducing its greenhouse-gas emissions by 25% by 2025 and its current emission levels indicate that it is set to achieve this. It is currently looking at setting 2030 targets.

“We are making investments in energy efficient warehousing and zero-carbon emission refrigeration. We operate huge freezers, chill rooms and temperature-controlled warehouses and these are built using the most modern and efficient insulation, and they also use the most efficient equipment that consume low amounts of energy. We have solar photovoltaic systems on the roofs and we are investigating onsite wind turbines to generate electricity,” he said.

These types of investments are an important component of what the company aims to do to reduce its carbon footprint, particularly in terms of its major inputs, namely the facilities that it runs and its huge fleet of motor vehicles.

“Currently, there is not yet a credible alternative to diesel trucks that can travel 300 km with a fridge motor and insulated body. We are going through an accelerated fleet replacement process, as Euro VI standard vehicles are much more efficient than those built according to previous standards. We are looking at biodiesel and other potential alternative fuels to make our fleet as sustainable as possible.”

However, the company was investing in smaller electric vehicles for use in cities, he added.

Further, in terms of packaging, the company is moving away from single-use packaging to either biodegradable, compostable or recyclable materials.

“Similarly, we are taking lots of steps to ensure that our food sources are sustainable, and that they are farmed or fished according to sustainability principles and practices. We are encouraged that there is a level of responsibility for sustainability shown by producers,” Berson added.

Bidcorp CFO David Cleasby added that the company had launched an online ESG platform to manage the thousands of requests for ESG information from various interested parties.

“[The platform] is in its infancy in terms of populating it, but it is getting better,” he said during the results presentation.

Management is optimistic about the long-term future of the global foodservice industry and Bidcorp’s prospects. However, the short-term prospects are uncertain. There are many challenges in various economies and consumer confidence is fragile.

“Bidcorp is confident that it has the strategy, the management teams, and the business model to take advantage of any opportunities,” Berson concluded.