JSE-listed Bid Corporation (Bidcorp) successfully exited its UK logistics activities – Bestfood Contract Distribution and PCL – at the beginning of March, as expected.

In a market update on April 14, Bidcorp said trading for the nine months to March 31, on a like-for-like basis, had held up “reasonably well” and broadly in line with expectations.

However, the company lamented that the full effects of the Covid-19 crisis across many of its operations only appeared in the latter half of the month and that the full impact thereof would only become evident from April onwards.

In being part of the food distribution industry, Bidcorp has been designated an essential services and has continued operating.

However, the demand for food products has “substantially diminished” in many discretionary spend sectors – hotels, restaurants, pubs, leisure and travel. As such, Bidcorp’s businesses are actively seeking solutions for each market and attempting to replace a small portion of its lost revenue in new channels, such as home delivery and supply to other retail-related channels.

Nondiscretionary activities to institutional customers are continuing, the company said, noting that this included serving customers such as hospitals, aged care, prisons, the military and government departments.

Taking the lockdowns in response to Covid-19 into account, Bidcorp said these segments are experiencing an uptick in demand. However, Bidcorp expects this demand increase to normalise once the consumer panic and stockpiling eases.

Bidcorp is also involved in providing food and care packages in several countries.

Despite this, the company lamented that it “is very difficult” to quantify the exact extent of decline that the company is experiencing as different countries are at different stages of the virus and have implemented various strategies to fight the virus, which have a differing impact on Bidcorp’s end-customer base and vary weekly.

As an example, Bidcorp noted that it was seeing a “very encouraging and quick bounce back” in demand in China, where volumes were approaching the levels of a year ago.

In other major geographies, Bidcorp indicated that it was experiencing a short-term decline in volumes of between 45% and 70% relative to weekly volumes achieved during the comparative period in 2019.

Additionally, the Bidcorp group said it was cognisant of the need to retain as much human capacity as it was able to in order to scale up as quickly as circumstances allow once normality returns in its various territories.

Taking this into account, the company’s board and executive management would take a 30% reduction in fees and salary for the fourth quarter of its 2020 financial year to help support the business. This period could be extended, if need be, the company said.

Bidcorp is also, wherever possible, downscaling variable costs and lowering activity levels to assist in this. This will take place across areas including fuel, electricity and waste.

As at March 31, Bidcorp had headroom and facilities of R9.6-billion, which is in addition to its existing net debt.

Bidcorp has also cut back on any discretionary spend in capital expenditure (capex) and other business expenses, and is also scaling back any large capex plans for future years until there is greater clarity on the outlook.