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Bidvest delivers higher interim earnings, increased acquisitions

Bidvest's Brian Joffe

Bidvest's Brian Joffe

Photo by Duane Daws

27th February 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JSE-listed Bidvest posted “pleasing” results in an interim period marked by higher-than-usual acquisitive activity, Bidvest CEO Brian Joffe said on Thursday.

The service, trading and distribution company reported 19% higher revenue and trading profit for the six months to December, with positive performance emerging from all segments within Bidvest, despite a variable economic environment.

Group revenue for the period under review reached R89.6-billion on the back of significant growth in Asia Pacific and Europe.

Trading profit during the period rose to R4.2-billion, with a “steady” trading margin of 4.7%.

During the half-year to December, Bidvest posted headline earnings a share of 842.3c – a 16.2% rise on the 725.1c apiece reported during the prior corresponding period.

Joffe highlighted 16.6% higher operating expenses, but pointed out that on a constant currency basis expenses rose just 7.4% and, if the impact of material acquisitions were excluded, expenses rose by only 3.9%.

“The group’s financial position remains robust. Bidvest’s attitude to gearing remains prudent while retaining adequate headroom to accommodate acquisition opportunities,” he said.

Bidvest declared an interim scrip dividend of 398.1c to conserve cash for growth and acquisitions and “enable the group to avail itself of the numerous opportunities currently under consideration”, with a cash dividend alternative of 378c offered out of income reserves.

Bidvest continued to identify suitable opportunities and was “well positioned” to fund acquisitive and organic growth through own cash, debt or equity.

The company concluded R1.9-billion in acquisitions – which accounted for R1.8-billion of its revenue growth – during the period under review.

This compared with the R500-million spent on acquisitions during the prior corresponding period last year.

Bidvest bought the remaining 71.7% it did not already own in consumer products company Home of Living Brands for R538-million. The company also increased its stake in Mvelaserve’s outsourced services business from 35% to 100% for R847-million.

The acquisitions were funded from existing cash resources.

Bidvest also injected R755-million into acquiring shares in embattled pharmaceuticals company Adcock Ingram during the period under review and had, post-period, acquired another 44.5-million shares for R3.2-billion to bring its shareholding to 34.5%.

Joffe, who was appointed chairperson of Adcock this week, indicated that the focus would narrow to turning the business around.

An assessment of Adcock would be undertaken to “understand the opportunity and develop the potential”, he said.

Edited by Creamer Media Reporter

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