Despite continued economic headwinds, South African services, trading and distribution company Bidvest achieved a 13.4% year-on-year increase in headline earnings for the six months ended December 31, to R1.9-billion, while headline earnings a share increased by 12.5% year-on-year to 574c.
Trading profit for the first half of the 2018 financial year rose 12% to R3.1-billion, compared with a trading profit of R2.8-billion for the first half of the 2017 financial year.
Interim dividends increased by 12.3% to 255c a share.
"This performance demonstrates the benefits of our robust and diverse operating units, which collectively serve many key sectors of the South African economy," Bidvest CEO Lindsay Ralphs said during a media call on Monday.
He further added that the company had invested R4.9-billion in net acquisitions, capital expenditure and South African infrastructure projects during the six months under review.
Ralphs pointed out that all the South African trading operations, except for the automotive division, had grown their profits in the six months under review, while Bidvest Namibia delivered a disappointing performance.
The profits of Bidvest Namibia - traditionally a fishing business - reduced dramatically owing to a reduced quota from that country's Department of Fisheries, said Ralphs. As a result of this poor performance in the division, Bidvest is in the process of disposing of its operations in Namibia.
Bidvest expects the process to culminate in the second half of the current financial year, with operations in this division having been suspended by June.
"We believe the company will obtain a net asset value for the business as a minimum, and don't foresee big losses being incurred in the disposal of this business," Ralphs highlighted.
Meanwhile, an information technology (IT) revamp in the company's car rental and automotive division, caused "a couple of hiccups" with some of the electronic bookings, which had an impact on the automotive business in the second quarter of the financial year.
Bidvest South Africa's performance was further boosted by the strategically important offshore acquisition of Noonan and an additional three-month contribution from Brandcorp, Ralphs noted.
The company's services, freight and office and print divisions were the "outstanding performers" over the six-month period, with increases in trading profit of 24.3%, 18% and 12.7%, respectively.
Bidvest's share of profits from associated companies, before capital items, increased by 26.4% year-on-year, while cash generated by operations increased significantly from R1.8-billion in the six months ended December 31, 2016, to R3.3-billion in the six months under review.
Nonfinancial services, Ralphs noted, had strong cash conversion and Bidvest Bank was successful in raising deposits. The group absorbed R600-million of working capital in the first half of the current financial year, compared with R1.9-billion in the prior comparable period.
Group revenue increased by 10.7% year-on-year to R39.9-billion.
The gross profit margin was stable at 28.1%, which the company stated was largely owing to changes in the product mix and acquisitions.
Operating expenses increased by 13.2%, with like-for-like expense growth at 8.5%.
The Bidvest balance sheet remains robust with net debt only R700-million higher at R9-billion, despite a net R3.4-billion spent on recent acquisitions.
Meanwhile, Bidvest CFO Peter Meijer will be retiring on February 28. Mark Steyn has been appointed to this position, effective from March 1.