JSE-listed Bidvest improved its financial performance for the year ended June 30, revealing the benefits, particularly within the South African trading operations, of its well-diversified portfolio following its unbundling of Bid Corporation (Bidcorp) - rebranded as Bidfood - last year.
As the international services, trading and distribution firm continued to evolve, CEO Lindsay Ralphs on Monday commented that the company posted growth across the board with improvements in earnings, revenue and trading profit for the year under review, characterising the resilience of its business model.
During the 2017 financial year, headline earnings increased by 6.2% to R3.7-billion, up from R3.5-billion in 2016, while headline earnings a share rose 5.1% to 1 108.2c.
Basic earnings a share shot up 107% to 1 430.3c on the back of strong profitability gains from 38.4% held Adcock Ingram and 27.2% held Comair, which “notably increased Bidvest's share of profits” and “prompted a reversal of previous impairments”, owing to an increase in their respective market values.
However, despite the significant payback received from the significant shareholdings, Bidvest does not intend “just holding” associates and will review these holdings in the near future.
“[It is likely that] in two to three years, we will not own these shares,” Ralphs explained during a conference call, adding that Bidvest would like to invest in operating activities controlled, managed and operated directly by the company.
Meanwhile, Bidvest made “excellent progress” during the year on strengthening and realigning its portfolio to focus on seven core divisions, strategically growing within the core sectors, ensuring a strong and capable leadership team, directing capital spend on meaningful infrastructural developments and positioning for international diversification, Ralphs said.
Five of Bidvest’s seven divisions, namely services, commercial products, electrical, financial services and freight, in addition to Bidvest Properties, delivered growth in trading profit during the financial year, growing by an aggregate 4.6% to R6-billion, with a stable trading margin of 8.5%.
The share of profit from associates increased by 152.8%, owing to the improved performances at Adcock Ingram and Comair; however, the automotive and office and print segments revealed a dip in profits and Bidvest Namibia, dubbed the company’s “problem child”, suffered a significant decline.
Bidvest Namibia continued to be negatively impacted on by a lack of fishing quotas and a recessionary macroeconomic environment.
Bidvest’s revenue for the 12 months under review increased 4% to R71-billion, with R1.7-billion of the increase attributable to the contribution from Brandcorp, which Bidvest acquired in October.
The acquisition had enable the company to expand its range of complementary products and services.
The addition of Brandcorp to the commercial products division and smaller bolt-on acquisitions in the electrical and financial services divisions, in addition to a strong focus on clients and solutions, had also bolstered the company’s results for the year.
Bidvest also recognised R773-million from the sale of noncore assets including Cargo Carriers, Cullinan, about half of the Bidcorp shares and various other listed shares.
The monetisation of the remaining noncore assets will continue.
Post the financial year under review, Bidvest acquired Ireland-based integrated facility management services and solutions provider Noonan for €175-million in July, with the transaction to be effective September 1.
“The group will continue to actively explore selective acquisitive opportunities in local and international markets to complement existing product and service offerings,” Ralphs commented.
Bidvest declared a total dividend for the year of 491c a share, down from the 714c apiece declared in 2016, which had formed part of the larger Bidvest Group prior to the unbundling of the foodservice businesses.