JOHANNESBURG - Services trading and distribution company Bidvest yesterday reported a 12percent growth in profit for the six months to December, charging that it had benefited from a diverse portfolio.
The group said its trading profit grew to R3.1billion from R2.8bn for the comparable period last year.
“This again demonstrates the benefits of Bidvest’s robust and diverse operating units, which collectively serve many key sectors of the South African economy,” the company said.
Services, freight and office and print divisions were the stand-out performers, the company said, with increases in trading profit of 24.3percent, 18percent and 12.7percent respectively.
Bidvest chief executive Lindsay Ralphs said apart from the automotive division, the company's South African units all recorded growth in profits while Bidvest Namibia delivered a disappointing performance. Ralphs said that the automotive division was slightly off line with expectations.
“We have a large exposure to luxury brands,” Ralphs said, adding that the automotive division was vulnerable to shocks in the economy.
Ralph also said the company was in the process of disposing of the Namibian division.
“Namibia was 70percent a fishing-focused business . The government reduced our quotas drastically, and by June we should complete the disposal and should not incur any losses on the disposal," Ralphs said.
Bidvest, which employs 130000 people also said that headline earnings a share had strengthened 12.5percent to 574cents compared to 510.3c in the first half of 2017.
Bright Khumalo, an analyst at Vestact said that the results were strong, considering that the South African economy was not performing well.
“Bidvest is a proxy of the South African economy it is coming together for this company,” said Khumalo.
"Income from investments also improved to R24.9million from a R98.2m loss in the first half of 2017, and was attributable to the insurance portfolio which performed exceptionally compared to the prior year, but this was somewhat negated by a negative mark-to-market on our Mumbai Airport’s investment due to the strengthening of the rand", the company said.
Henry Biddlecombe, analyst at Johannesburg-based Anchor Capital, said not much new information was given regarding Bidvest’s strategic sale of non-core assets yesterday.
“But we assume that the group’s 38.5percent stake in Adcock Ingram and 27.2percent stake in Comair will be sold at a premium to market given Ralphs’ comments around improved market sentiment,” said Biddlecombe.
Ralphs said that Bidvest was encouraged by recent political changes in South Africa.
“Most divisions within Bidvest are ideally positioned to take advantage of a revival in economic growth and investment. Government overspending, substantially reduced infrastructural and other investments, as well as corruption, have led to South Africa experiencing significant economic damage, which will take many years to remedy. Any real benefits will take some time to fully flow through into the broader economy,” Ralphs said.
Bidvest said yesterday it had approved the appointment of Mark Steyn as chief financial officer and executive director from March 1, replacing retiring Peter Meijer.
Bidvest shares rose 0.43percent on the JSE yesterday to close at R236.