JSE-listed food services company Bidfood – formerly Bid Corporation, which was unbundled from international services, trading and distribution firm Bidvest last year – reported on Thursday that its headline earnings a share rose 9.4% to 1 181c for the year ended June 30, 2017, while basic earnings a share rose 16.7% to 1 207c.
CEO Bernard Berson noted that a gross profit percentage of 21.7% confirmed “the benefit of trading with the correct mix of business”.
“Operating expenses fell 4.9%, despite wage pressures in growing economies and higher sales and distribution costs,” he said at the company’s financial results presentation in Johannesburg, Gauteng.
At R130.9-billion, net revenue fell 6.8%, owing to currency impacts and the deliberate exit in various geographies of some low-margin business.
Constant currency net revenue growth of 4.6% was delivered, reflecting the company’s focus on core foodservice markets in all geographies.
Trading profit rose 6.9% to R5.5-billion and trading margin improved to 4.2%.
Bidfood acquired 90% of Spanish multi-temperature food company Guzmán Gastronomía and Cuttings during the period for an enterprise value of €75-million.
The group also concluded smaller bolt-on acquisitions in Australia, Brazil, Belgium, Italy and the UK totalling R590.4-million.
In April, Bidfood finalised a deal with Puratos Group, enabling Puratos to acquire joint control of the company’s South African bakery supplies business.
Post year-end, an acquisition was completed involving 70% of Pier 7 Foods, a small Munich-based foodservice business.
Revenue in Australasia fell, following the strategic exit of low-margin contracts by 2.9% to R29.4-billion.
Trading profit rose 9.8% to R2-billion, a 12% increase in constant-currency terms.
“Australia reported a great finish to the year and higher trading profit. Net revenue fell following the continued exit of low-margin logistics business. Overall margins rose,” said Berson.
Freetrade sales rose 5%, driven higher by hard-working sales teams and focused initiatives.
Trading profit in Bidfood UK was up strongly and exceeded expectations, though overall sales growth was constrained by the strategic exit of several large, unprofitable contracts.
Freetrade volume growth of 8% was achieved.
Margins were well managed and expenses contained. Cash flow remained robust and investment continued.
“The freetrade sales mix showed continued improvement. National account margins were well managed while significant new contracts supported fourth-quarter volumes. Own-brand growth was strong,” he noted.
Berson added that specialist focus areas of wine and meat achieved pleasing volume and profit gains.
“Across the wider business, ongoing growth is projected,” he said.
In Europe, revenue rose 4% to R32.2-billion, while trading profit rose 11.5% to R1.2-billion.
In constant currency terms, trading profit rose 20.5%.
Eastern European businesses continued to deliver good growth, bolstered by buoyant economic conditions.
Emerging markets continued to deliver commendable results.
Revenue rose 5.9% to R19.3-billion, with trading profit up 18.1% at R1.1-billion.
Excluding currency effects, profitability was up 20.8%.
Berson said Bidfood’s strategic focus called for the balancing of exposure between contract, national and independent customers.
Rebalancing had driven gross and trading margin improvements, despite generally low inflation environments and subdued economic growth.
“Every business improved its performance in home currencies, with the exception of Aktaes Turkey and Logistics UK,” he said.
Berson noted that the company’s rebranding as Bidfood was embraced worldwide, reinforcing the company’s credentials as ‘value-add food people’ in its first full year as a separate entity.
Bidfood declared a final dividend of R2.50 a share, bringing the total to R5, up from R2.41.