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Nov 25, 2011

Group posts reasonable results amid economic challenges

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David Cleasby
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The ability to identify growth markets, a quick reaction to the economic downturn and having successful management teams in place across all its business divisions have all contributed to the financial success of JSE-listed Bidvest Group, says financial director David Cleasby.

The group, which follows a decentralised business model, reported a 7.9% increase in revenue to R118.5-billion for the 2011 financial year, compared with R109.8-billion earned the year before.

This is despite prevailing tough trading conditions in most economies it operates in.

Cleasby says that, while Bidvest was impacted on by the economic uncertainty, it was able to capitalise on its global structuring. “Because we are a decentralised company operating in many different economies, we are only marginally impacted on by regional economic instabilities.”

The group has operations in Southern Africa, Europe and the Asia Pacific region. Cleasby says operating in well-performing economies, such as those in Asia, has helped to ease the pressure experienced by companies based in countries that are in significant financial crises.

Bidvest operates food service product distribution companies in the Asia Pacific region, namely Bidvest Australia, Bidvest New Zealand, Angliss Singapore and Angliss Greater China.

Revenue in the Asia Pacific region grew by 11.5% to R19.6-billion, while trading profit increased by 14.2% to R833.1-million in the 2011 financial year.

Further, Bidvest’s European businesses are experiencing economic pressure but continue to perform fairly well. Bidvest believes trading conditions in this region will improve over time.

Meanwhile, as part of the group’s diversification and decentralisation strategy, it is in the process of acquiring businesses in Egypt and Chile. “At Bidvest, we will continue to bolt on markets and enlarge the company’s food services footprint,” concludes Cleasby.

Challenges
Meanwhile, Cleasby points out that one of the most significant challenges facing the group is South Africa’s rail system, which has forced many of Bidvest’s customers to transport its goods by road.

This results in congestion on the roads and at ports, affecting delivery times.

Cleasby says Bidvest is aware of the promise by government to improve the railway system, adding that it would welcome this. “Industrial bulk commodities should be transported by rail, so we would appreciate government’s investment in railway resuscitation.”

In October, State-owned freight logistics group Transnet announced that it had brought forward R6.1-billion in capital expenditure previously earmarked for the tail-end of its five-year rolling budget into the next two years to improve rail and port efficiencies.

Edited by: Chanel de Bruyn
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