Bidcorp earnings soar as it recovers from UK writedowns
The listed food service group expects interim earnings to rise by as much as 22%
Bidcorp, the food services company spun off from Bidvest in 2016, said on Monday it expects earnings to increase by about a fifth in the six months to end-December, as it recovers from a reduction in the value of its assets in the UK.
The company, which operates in Europe, Australasia and emerging markets in Africa, Asia, South America and the Middle East, said it expected basic earnings per share to rise as much as 22% to 685.8c in the six months to end-December.
The company said headline earnings per share were likely to increase by between 4% and 6%.
When it released full-year results in August 2019, Bidcorp said it expected increases in earnings to continue in the 2020 financial year.
Bidcorp did not go into details in its trading update on Monday, but it reported an intangible asset impairment of £25.3m (R480m) related to its UK PCL dairy distribution business in its half year to end-December 2018.
In the 2018 interim results, Bidcorp had classified all its UK logistics’ businesses as discontinued. As past of a pullback from low-margin and high-volume logistics activities, Bidcorp in 2019 sold the noncore UK logistics business Best Food Logistics to the Booker Group, a subsidiary of Tesco, for an undisclosed amount.
Bidcorp, which generated about 95% of its revenue outside SA in 2019, had acquired the UK contract distribution business in 1999. That business had large contracts with fast-food chains such as Yum Brands’s KFC and Burger King.
In 2017, Best Food Logistics lost a contract to deliver to KFC outlets to DHL Supply Chain. But after delivery problems that left hundreds of restaurants running out of chicken, Best Food Logistics resumed KFC deliveries in 2018.
In 2019 Bidcorp also exited the loss-making PCL distribution business. The company had previously attributed PCL’s poor performance to low revenue increases and higher distribution costs.
Bidcorp, which has previously pointed out cost increases in fuel, wages and energy that pushed up its operating expenses, will release interim results on Wednesday.
The company’s shares were down 3.53% to R316.85 on Monday.