Food service multinational Bidcorp CEO Bernard Berson has lauded the company's more than 23 000 employees across 35 countries, as well as its diversity of clients and decentralised operations, for producing resilient results for the six months to December 31, 2020.
Many of the sectors in which Bidcorp's clients operate were significantly impacted on by the Covid-19 pandemic and the restrictions imposed to combat its spread. These sectors include the hospitality, tourism, conference and sporting events sectors, he said.
Revenue for the interim period decreased by 10.9% to R60.8-billion. Group trading profit declined by 37.4% to R2.2-billion while its trading profit margin fell to 3.7% from the 5.2% achieved for the six months ended December 31, 2019.
Gross profit percentage declined marginally to 23.4% from 23.8% through a combination of some operations liquidating inventories as a consequence of the suddenness and severity of government-imposed lockdowns and a focus on some price discounting to gain market share.
Bidcorp was a net beneficiary in securing new customers as customers had time to consider their operations and investigate new suppliers, and it only lost a few customers. Additionally, this placed the group in an advantageous position to grow once markets opened up, said Berson.
Headline earnings a share fell by 46.2% to 391.6c, while cash generated fell by 7.8% to R3.7-billion. However, group free cash flow grew to R2.7-billion, an increase of R1.8-billion compared with the prior comparable period.
Additionally, the group reduced its debt-to-equity ratio from 19% to 9%, said Bidcorp CFO David Cleasby.
"Net debt, at R2.6-billion, was down from R4.9-billion as at December 31, 2019, and benefited from a much-improved working capital position and the proceeds arising out of the sale and leaseback transactions. In hard currencies, our net debt, at £128-million, is better than that of £261.5-million as at June 30, 2020, and that of £269-million as at December 2019."
"The financial base we have is supportive of business recovery and growth, as business returns in different jurisdictions. The company was cash-generative, profitable and healthy during the half-year, and we are confident this will continue into the second half of the financial year," said Cleasby.
The group achieved absolute cost savings of 17% in constant currency against a decline in revenues of 21.9% in constant currency. However, the overall cost of doing business increased to 19.7%, up from 18.5%, owing to lower revenues.
The group declined to declare a dividend, noting that it was forecasting that risks were expected to remain high and the board viewed declaring a dividend as inappropriate given the worldwide uncertainty and the pressure under which some of its northern hemisphere businesses were operating.
"We feel the timing of a dividend is not correct. About half of our UK staff are on furlough and, while they are receiving government support, we believe that it is in the best interest of all stakeholders to withhold a dividend at this time. We will reconsider a dividend in line with our normal dividend policy in August," said Berson.
Additionally, Bidcorp's employees, as experienced workers in an essential service industry, were sought after and that the company had taken the long-term view of retaining as many of them as feasible to be ready to serve demand once it returns. While about 65% of its expenses are for its payroll, its people remained its best asset, he added.
"Overall, I am disappointed that revenue is down by 46%, but I am thrilled with what our teams have done in terms of performance, resilience and cash generation. We are profitable and in a strong position while waiting for an improvement in circumstances," Berson stated.