Bidcorp operates in developed and developing economies on five continents, in 34 countries. Although it is listed only on the JSE, it earns only about 8percent of its income from South Africa.
These are some of their businesses:
Angliss, a leading food service wholesaler and distributor in Singapore and Hong Kong.
Netherlands and Belgium food service company, Deli XL.
Crean Foodservice in New Zealand.
PCL24/7 Transport, a chilled UK products storage and distribution business.
Distribuidora e Importadora Irmãos Avelino, a Brazilian food service provider.
Gruppo Dac, a leading Italian food service provider.
Deli Meals in Chile.
Nowaco Baltics (Lithuania, Estonia & Latvia), a leading distributor of frozen and chilled products across the Baltic region.
Nowaco, a leading food service provider operating in the Czech Republic and Slovakia.
Farutex, a Polish food service provider.
They have a decentralised business model of management which encourages the entrepreneurial spirit contained in each of its businesses.
Each business is directly responsible for its product range, its buying and sales approach. Businesses in the different regions retain their local brand, tone of voice, look and feel specific to local culture.
The BidCorp model is built on the concept of ownership by independent teams who decide day-by-day what is best for the business. Local autonomy accelerates decision making and leverages local knowledge. Each business unit strives to understand every market segment that they operate in, stay close to customers, and anticipate their requirements.
They service a broad mix of small, medium and large customers with tailor-made solutions fit for the outlets’ purpose. The group partners with responsible suppliers which allow them to bring a broad range of product solutions to suit their customer’s needs. Sustainability and food safety are major themes, and adherence to industry regulations helps mitigate risk for their customers.
In recent years, the company has progressively built scale through acquisitions, and before the unbundling from Bidvest, Bidcorp was the most profitable business unit in Bidvest.
Approximately one third of their profits originate from the UK, which performs very well, and it would further invest in the business to increase capacity in a bid to capture anticipated growth opportunities.
Eastern Europe, and for that matter most of the world, remained particularly buoyant regarding economic growth. They have further expansion plans into the European region, as they are not represented or underrepresented in many countries. Even the South African prospects increased.
The last full year results for June 2017 was quite impressive, despite the stronger rand. Headline earnings per share grew by 9.4percent. Trading profit rose by 16percent and headline earnings by 19percent in constant currency (if the exchange rate remained the same).
They have real profit growth in their businesses. While they are still exiting low margin businesses, their trading margin has already increased to 4.2percent (an increase of 14.2percent). There is excellent co-operation between the businesses in the different geographies concerning procurement and marketing. Bidcorp’s operations are primarily global, and the weakness of the rand against major currencies is a fillip to its earnings since they earn only 8percent of their profits in rand.
This is a reliable global company with excellent earnings potential in the long term. The share price pulled back from close to R320 to R276, mainly due to the strong rand. If you want to buy a company that will benefit from a weaker rand, this is one to consider.
Amelia Morgenrood is a BCom (Hons) Financial Planning, member of the South African Institute of Stockbrokers, portfolio manager and regional director Faerie Glen Stockbroking & Financial Planning.
The views expressed in this article are not necessarily those of the Independent Group.
- BUSINESS REPORT