‘Proudly SA’ Bidvest is having a hard time in its home market
Emfuleni municipality does not appear to be a typical Bidvest customer, judging from the diversified group’s 9% revenue growth.
But a 20% decline in net profit indicates the strain the group — whose motto is "Proudly Bidvest and proudly South African" — faces in its home market.
Bidvest’s results statement did not name the municipality whose vehicles it recently repossessed, but did mention its financial services division suffered from "fleet contract roll-off" and "the termination of a major short-term rental contract".
The group’s overall revenue grew 9% to R76bn in the year to end-June, its results statement released on Monday morning said.
Net profit declined to 20% to R3.9bn, though headline earnings per share (HEPS) grew 11% to R12.32 from R11.08.
Bidvest declared a final dividend of R3.01, taking the total for its 2018 financial year to R5.56, representing 13% growth from the prior year’s R4.91.
The group’s automotive division, which houses the McCarthy chain of vehicle dealerships, contributed a third of total sales but less than 10% of trading profit.
The automotive division achieved 2.1% sales growth, but trading profit declined 9.2%.
"New vehicles sold by McCarthy outpaced the industry but margins were under strain. Significant pressure in the luxury segment, in which McCarthy has a leading market share, and reduced parts activity was largely neutralised by good fleet business, solid activity in the volume brands and the benefit from closing nonperforming dealers in the previous year," Bidvest said.
"The used vehicle segment softened recently as aggressive new vehicle incentives pose a challenge.
"Bidvest Car Rental revenue, cost control and fleet management have been disappointing, resulting in a significant decline in trading profit. This business is currently being reviewed."
Bidvest’s services division was its star performer, contributing a quarter of the group’s revenue and 32% of its trading profit.
The service division’s revenue grew 44% to R19bn and its trading profit contribution 26% to R2bn.
The financial services division suffered a 36% decline in revenue to R2.6bn, but managed to keep trading profit flat at R632m.
"No big public sector fleet contracts were secured during the year despite a promising pipeline as decision-making was postponed," Bidvest said.