Bidcorp, the JSE-listed international foodservice group operating on five continents, said a strong performance in the six months to December 31 was only marred slightly by a subdued performance in mainland China.
In constant currency measures, headline earnings per share (HEPS) increased by 10% to 1 267.1 cents per share, despite activity in Greater China remaining subdued by the macro environment. An interim cash dividend of 560 cents a share was declared, an increase of 6.7% on last year’s half-year payout.
“We have increased our revenue by 7.1% in constant currency, and after adjusting for our relevant food-basket inflation and acquisitions, we have grown the business by around 5% in real organic terms,” Bidcorp CEO, Bernard Berson, said in a statement.
He said food inflation had disappeared, although cost inflation remains sticky, driven by wage pressures from labour availability, particularly in the warehouse and driver categories. Economic conditions had tightened in many geographies, and customers had become more price-sensitive, while competition has increased.
Currency volatility negatively impacted the rand financial performance by 4%. Basic earnings per share (EPS) declined by 2% to 1 120.7 cents per share, primarily due to the non-cash losses incurred on the exit of the German operations.
The UK delivered an improved performance in its core foodservice operations and also benefited from an acquisition. Emerging Markets had an excellent performance from the South African businesses.
European businesses produced a good performance under difficult macro conditions, with growth in revenues and trading profits. Almost every business delivered a stronger result.
Trading conditions in Australasia were challenging, but both Australia and New Zealand delivered solid trading performances.
“Our global teams are to be commended for adapting to prevailing market conditions and again, successfully delivering our strategic foodservice focus. Our entrepreneurial spirit and decentralised operating model continued to contribute to our success,” Berson said.
Activity levels in the first quarter were impacted by unseasonably cold and wet September weather in the Northern Hemisphere, coupled with extreme weather-related flooding in Eastern Europe, which detrimentally affected the UK and European businesses.
However, there was an improvement in the second quarter and the festive season.
Investment activity, primarily into new distribution capacity, has continued. Acquisition activity increased with eight bolt-on opportunities concluded.
Net revenue of R117.9 billion rose by 3.6%, and by 7.1% in constant currency terms, reflecting both organic and acquisitive growth, despite non-existent food inflation and weak consumer demand.
Gross profit percentage at 24.1% (23.7%) held up well, as management in several businesses aggressively sacrificed some margin to maintain volumes and achieve market share growth. Supply chain disruptions, particularly arising from the Red Sea crisis, resulted in a measure of over-stocked positions.
Berson said activity levels through January and into February had held up in line with expectations, considering these are slow trading periods due to the Northern Hemisphere winter and Chinese New Year.
Business Report