JOHANNESBURG - Bidvest, South Africa's trading, distribution and services group has increased headline earnings by 6.2% to R3.7 billion for the year ended 30 June 2017.
Bidvest's operational divisions include seven core areas: Services, Freight, Automotive, Office and Print, Commercial Products, Financial Services and Electrical.
The company also holds investment in Bidvest Namibia, Bidvest Properties, Adcock Ingram, Comair and Bidcorp.
According to Chief Executive, Lindsay Ralphs, Bidvest has strengthened and realigned their portfolio on the seven core divisions by cleverly growing their sectors and positioning for international diversification.
· Trading profit up 4.6% to R6 billion, and SA operations up 6.4%
· Five of the seven divisions recorded commendable increases in trading profit despite challenging economic conditions
· Strong improvements in associate companies
· R773 million cash from non-core asset disposals
· Basic earnings per share up 107% to 1 430.3 cents
· Headline earnings increased by 6.2% to R3.7 billion
· HEPS increased by 5.1% to 1 108.2 cents
· Tight asset management
· Strong balance sheet maintained: Net debt/EBITDA <1x
· Cash generation of R6.9 billion, after significant investment in South Africa
· Final dividend declared of 264 cents per share
· Acquisition of Irish and UK-based facility management services leader, Noonan
“We have delivered a solid trading result in an exacting market, characterised by a lack of economic growth and declining consumer spend, as well as significant business and political uncertainty. We are evolving successfully following last year’s unbundling of the food service businesses. The benefits of our diversified portfolio and the quality of the underlying businesses are evident in the performance of the trading operations where five of Bidvest’s seven divisions, as well as Bidvest Properties, delivered growth in trading profit”, said Ralphs.
Bidvest's South African operations delivered enhanced results in most of its divisions, with a 6.4% trading profit increase against 3.5% revenue growth. The operations in Commercial Products, Electrical, Financial Services, Freight and Services contributed to the growth in the trading result.
Bidvest's results is believed to be achieved by their focus on clients and solutions as well as the purchase of Brandcorp in October 2016 within the Products division and acquisitions in the Electrical and Financial Services divisions.
In addition, cost discipline in terms of reducing the cost of doing business aid in growth of most businesses subject to deflationary pressure.
Despite Bidvest Automotive lack of growing profits, it managed to perform ahead of a taxing market.
However, Bidvest Namibia continued to be negatively impacted by limited fishing quota allocation,higher quota buy-in prices and a recessionary macroeconomic environment in Namibia.
Bidvest comments that tactical options are being considered.
The reassessment of Bidvest Corporate's investment with Mumbai International Airport benefited the services group.
This resulted in a positive performance from the property division.
Bidvest's shares of profits in Adcock Ingram and Comair also increased with profitability gains.
As a result of these financial influences, basic earnings per share more than doubled to 1 430.3 cents (2016: 692.6 cents).
Headline earnings per share increased by 5.1% to 1 108.2 cents (2016: 1 054.1 cents).
Bidvest has announced a final gross cash dividend of 264 cents per ordinary share for the year ended 30 June 2017.
The total dividend for the year now stands at 468 cents per share.
Group revenue increased 4.0% to R71.0 billion (2016: R68.2 billion), with a stable gross profit margin at 29.1% (2016: 29.2%).
Operating expenses were well controlled, increasing by 3.6%. Like-for-like expenses increased by 1.7%.
Trading profit grew 4.6% to R6.0 billion (2016: R5.8 billion), with a trading margin of 8.5% (2016: 8.4%).
Bidvest’s headline earnings increased by 6.2% to R3.7 billion (2016: R3.5 billion) and HEPS by 5.1% to 1 108,2 cents per share.
The number of weighted average shares in issue increased.
Cash generated by operations at R6.9 billion, was relatively lower than the R7 billion generated in the prior year.
R773 million cash was generated on the disposal of non-core assets.
Bidvest acquired 100% of Brandcorp.
The Group also acquired 100% of Iris and UK-based facility management services and solutions provider, Noonan for EUR175 million in July 2017.
Given the current economic data, improving economic conditions is expected.
This lies against the backdrop of higher commodity prices and improved customer confidence.
Bidvest believes that with a continued strong focus on expense control and asset management, they can ensure sustainable growth.
In addition, the company says that it will continue to explore acquisitive opportunities in local and international markets with the intent of complimenting their core product and service offerings.
“We maintain a sound financial position and a strong balance sheet with adequate headroom to support growth aspirations”, concluded Ralphs.
- BUSINESS REPORT ONLINE