Bidvest saw six out of its seven divisions report strong trading growth after already rebounding last year following the pandemic, and it was in pursuit of offshore acquisitions, chief executive Mpumi Madisa said yesterday.
Trading profit growth increased 23 percent to R9.7 billion for the year to June 30 and headline earnings per share from continuing operations grew 21.9 percent to 1 442.0 cents. The total dividend was up 24 percent to 744c per share after a final dividend of 364c was declared.
Key drivers were growth from record bulk commodity volumes handled and pharmaceutical sales, new vehicle price and volume increases, a rebound in travel and tourism-related revenue and full year contributions from acquisitions in the UK and Ireland.
Madisa said in a telephone interview they were very happy with the results given that they were delivered in a year of several domestic and global crises, as well as rapid changes in demand.
Anchor Capital investment analyst Stephan Erasmus said the 24 percent increase in normalised headline earnings per share to R16.02 was slightly below market expectations, nevertheless management had set a positive tone at the results presentation.
“Freight South Africa benefited from substantial maize export volumes, while Services South Africa enjoyed a rebound in tourism and hospitality. In the branded products division, Adcock stood out thanks to a more normal flu season,” Erasmus said.
He said Bidvest’s commercial products and automotive segments delivered good earnings growth. Reporting the services international division separately from South African services would increase visibility and may be well received by the sell-side, he said.
He added that Bidvest’s entry into Australia’s facilities management and general cleaning markets might also result in new profits.
The results showed that In the financial services division, however, trading profit was R85.6 million compared with R331.6m the year before.
Madisa said this was due to one-off costs, which included branch closure costs – Bidvest Bank is going digital. Capital deployment was slower. Demand for fleet and forex-related products was muted. Investment income declined. However, she expected a “material” improvement from financial services in the new financial year.
She said the trading profit was similar to the profits, pre the 2016 unbundling of the food service businesses. The commercial products division generated trading profit of more than R1bn, a milestone for it, while four of the seven divisions were now generating profitability in excess of R1bn each.
“Bidvest’s pipeline in the niche areas for international expansion as well as local bolt-on acquisitions, remains healthy and opportunities are being actively pursued,” she said.
During the year A2 Group, comprising mainly electric forklifts, was acquired for R92m to enhance Bidvest materials handling’s offerings. Service Royale, a hygiene business in KwaZulu-Natal, was bought to enhance Steiner’s footprint.
Mayflower, a UK hygiene consumable business was acquired from May 2022, for £19.7m (R390.6m) as a bolt-on business to PHS.
Post year-end Bidvest acquired B.I.C. Services (BIC) in Australia for an enterprise value of A$163m (R1.9bn) to advance Bidvest’s facilities management service offering and global footprint.
She said Bidvest’s board also approved a R547.6m investment for multi-purpose chemical tanks in Richards Bay. A R500m investment was approved in the freight division to build an inland LPG terminal. Madisa said the existing LPG terminal in Richards Bay was trading ahead of expectations.
“South Africa’s mining and agricultural sectors remain robust, and private sector investment as well as renewable energy projects are contributing positively to demand. Local manufacturing and production capacity have normalised, showing increased activity. Demand in tourism and hospitality-related areas has been increasing, with our platforms all geared for this upswing,” said Madisa.