Bidcorp ring-fences SA headwinds, lifts interim revenues and earnings

Bidfood is now set to complete an acquisition of a frozen food service business in the Eastern Cape. File photo

Bidfood is now set to complete an acquisition of a frozen food service business in the Eastern Cape. File photo

Published Feb 21, 2024


Headwinds buffeting South African corporates had not impacted Bidcorp’s operating units in the country, CEO Bernard Berson said yesterday, with the Bidfood subsidiary now set to complete acquisition of an Eastern Cape frozen food service company.

In the half-year period to end December 2023, South Africa accounted for about 4% and 8% of Bidcorp’s total revenues and trading profits of R113.8 billion – up 24% on prior year – and R5.9bn (20.8% higher), respectively.

Europe, where the company also has operations, raised revenues by 11.2% to R35.1bn, while the UK had 21.2% stronger revenues at R28bn. Trading profits from the emerging markets division, including South Africa, amounted to R0.9bn, although revenue surged 5.1% to R16.1bn while Australasia recorded a 10.8% increase in trading profits to R1.7bn.

With cash generated from operations ballooning 11.4% to R6.8bn, Bidcorp has lifted interim headline earning per share by a massive 18.6% to 1152.4 cents.

JSE analysts said the performance of the company signified rare “good news” for a South African listed company, while others highlighted that overall the “robust financial performance” demonstrated the strength of its diversified business model and commitment” to shareholder returns.

Berson attributed the growth in earnings and revenue to “a great management team that was executing the strategy very well” for Bidcorp.

The company had not been affected much by headwinds emanating from the South African operating environment that other executives say is driving up costs, he said.

“The private sector makes up for the failure of government. Our business has done remarkably well under the circumstances in a tough environment. We have found ways around the issues; obviously it’s not perfect, it could have been better if the surrounding infrastructure worked properly notwithstanding the challenges with port delays and load shedding,” Berson told “Business Report” in an interview.

He also said he was looking forward to an easing off in inflation and interest rates that were affecting consumers worldwide.

Inflation was still persistent, but was now coming off the highs of the previous year, while the interest rate environment “is now one of stability to softening a little bit”, although Berson said he was not sure if the easing off on interest rates would kick in quickly.

“We are confident that all things being equal we should manage to continue to grow. Hopefully global economies improve and don’t get worse; our teams will do whatever they can to sustain the growth,” said Berson.

The company’s Bidfood South Africa unit had top performed despite the impact of avian flu and a weaker Christmas period, which the company views as evidence of the pressure on patrons’ disposable incomes. Bidfood was now set to complete an acquisition of a frozen food service business in the Eastern Cape.

Occupation of the Johannesburg South Bidfood multi-temp facility is planned for April this year as competition is expected to heighten in the six months to June. Bidcorp also operates Bidcorp Food Africa and Crown Food Group.

“Moderating but persistent food inflation complicated trading as many customers became more price sensitive and competition increased. Cost inflation has eased, labour availability is improving, although wage pressures remain as we backfill positions and grow our workforce to cater for the increased scale of the business,” the company said.

Net finance charges for Bidcorp during the six-month period under review grew by 41.8% to R317.5 million, driven by higher investments into working capital, further facility expansions, dividend payments to shareholders, and a materially higher interest rate environment.

The company said it will continue with its strategic focus on wholesaling of food and allied products to the eating-out-of-home market. It is also focusing on “growth through selling to the correct mix of customers serviced by well-located infrastructure and enabled by world-class technology” solutions.

“Growth is further supplemented by in-territory bolt-on acquisitions to expand geographic reach and product range, or via strategic acquisitions to enter new markets.”