JSE-listed Bidvest delivered a strong operating and financial performance for the six months ended December 31, 2020, with revenue up 3.4% year-on-year to R44.4-billion.
Trading profit increased by 3.5% year-on-year to R4.1-billion, off a pre-pandemic base, which was enhanced by the consolidation of UK hygiene service provider PHS.
“Demand for hygiene and facility services, do-it-yourself (DIY) products and bulk commodity services were good over the period, but demand for the travel and related sectors, as well as hospitality, were hard-hit and remain, largely, closed,” Bidvest CE Mpumi Madisa said on March 1.
Normalised headline earnings per share (HEPS) grew by 6.1% to 651.6c from continuing operations. The group declared an interim dividend of 290c apiece, up 2.8% year-on-year.
Good cost and margin management across the group limited the negative profit impact of lower demand. This, together with the good balance sheet management, resulted in cash generated by operations almost doubling to R6.2-billion from the previous six months.
Free cash generated totalled R3.1-billion. The group noted that its cash conversion was good at 124.3%.
Funds employed improved significantly from 17.8% at the end of its 2020 financial year-end in June 2020 to 31.3%. Return on invested capital of 12.9%, unchanged from June 30, 2020, is above the group’s weighted cost of capital.
Madisa noted that 95% of employees have been able to return to work, from about 75% of employees that were unable to work during the height of the lockdown in 2020.
Bidvest lost 44 employees to Covid-19 during the peak of infections over the past few months.
The R400-million Bidvest Covid-19 Fund continued to support South African employees who were unable to work owing to restrictions, the group said, while employees in the UK and Ireland continued to receive support from their respective government employee relief schemes.
Meanwhile, the group’s Commercial Products and Services divisions delivered good results. The South African Services’ businesses delivered a solid result after taking into account the exposure to impacted travel and related industries.
Automotive’s efficiency improvements and expense management culminated in good profit growth despite significantly lower vehicle sales. Freight’s trading profit was solid as the terminals handled greater bulk and agricultural volumes, while other general import and export volumes remained depressed.
Branded Products was resilient considering the significant demand disruption caused by the work-from-home phenomena and a no flu season, Bidvest said.
Financial Services’ performance was noted as disappointing owing to reduced foreign exchange demand and lower interest rates.
On a like-for-like basis, expenses decreased by 9.6%. Although additional borrowings were raised to fund the PHS acquisition, net debt decreased to R15.8-billion as at December 31.
Basic earnings a share from continuing operations grew by 17.2% to 562.3c, mainly owing to large impairments, disposals and associated losses in the prior period not recurring.
“The last phase of our portfolio clean-up, which started after the unbundling of the foodservices businesses has gained traction. Our 6.75% stake in the Mumbai International Airport was sold and the R1-billion cash proceeds have been banked.
“A sale and purchase agreement has been signed for the disposal of Bidair Services, the airports ground handling business and the disposal process for Bidvest Car Rental is under way,” Madisa said.
Bidvest’s R1-billion liquid petroleum gas (LPG) storage facility was successfully commissioned on October 22, 2020.
“We anticipate that the stability of supply made possible by this facility will enable South Africans to source a clean energy alternative, while also stimulating the expansion of the LPG value chain, creating opportunities for small and medium-sized enterprises,” Madisa enthused.
“Looking ahead, it is likely that the economic downturn will persist, with the pace of recovery remaining largely uncertain. Cognisant of the constrained operating environment, Bidvest has optimised its cost base and improved efficiencies. The group’s businesses are future-fit and their operating models scalable, and well placed for growth,” said Madisa.
Bidvest has also better aligned its product and service mix with evolving market demands. Its basic-need services and everyday essential products is posited to position the group favourably to withstand the current headwinds, as well as to capitalise on the resumption of trade.
Bidvest said it would continue to seek new revenue opportunities as it pursues its strategy of expanding into niche areas, while maintaining sound capital allocation discipline.