Picture: ISTOCK
Picture: ISTOCK

Bidvest pushed through SA’s dire economic conditions in the six months to December 2017, while acknowledging that it needed more markets abroad.

The diversified industrial group grew trading profit 12% to R3.1bn, generating R1.4bn more cash through operations than in the same period in 2016.

Revenue increased 10.7% to R40bn, with profit attributable
to shareholders growing 13.4% to R1.9bn.

"In the context of the period it was a very nice result," CEO Lindsay Ralphs said on Monday.

The company had invested R4.9bn in net acquisitions, capital expenditure and South African infrastructure projects. The interim dividend of 255c per share was up 12.3%.

"It was a good performance by [the South African] trading divisions with freight being the real standout," Avior Capital Markets analyst Mark Hodgson said on Monday.

He said the all of the group’s divisions were well positioned to benefit from an "uptick" in growth in SA. But the benefits derived from recent changes in the group would take some time to manifest, Hodgson said.

There would also be pricing pressure in the short term because of rand strength.

Net capital items were incurred from a loss on disposal and closure of Botswana operations, and also a profit on the sale of a shipping vessel in Namibia. The latter came about as a result of Bidvest losing fishing quotas in that nation amid the negative effect of the recent global minerals commodities rout, that which had also hit oil prices.

Net negative adjustments were made to the investments in Adcock Ingram and Comair.

Ralphs said Bidvest would likely sell theses assets as they were noncore to business. He said that Bidvest was extremely optimistic about the new political climate in SA. "Things are just a lot more stable," he said. A stronger rand was also good for the group, as it did 95% of business in SA.

However, poor economic growth in SA in recent years, the increasing saturation of local markets and competition issues would continue to push Bidvest abroad.

This came after the industrial assets of the Bidvest group had been split from the more globally orientated food services business, now listed as Bidcorp on the JSE, in May 2016.

Bidvest, meanwhile, had fairly recently bought up Irish facility management services group Noonan for about R2.7bn from UK private-equity firm Alchemy Partners, helping it diversify abroad. Noonan operates in Ireland and across the UK. Bidvest had said the acquisitionacquisition would allow for potential expansion into other parts of Europe.

For the year ended December 2017, Bidvest kept the gross profit margin stable at 28.1%. It said some margin pressure was evident in certain industries.

Outgoing Bidvest groupCFO chief financial officer Peter Meijer — who was retiring — said on Monday that revenues were up but margins were down in the automotive and electrical divisions.

Meanwhile, delayed industrial projects and poor domestic construction markets had negatively affected the group’s services and commercial products divisions.

Meijer has been replaced by Mark Steyn, effective from March 1 2018. Steyn joined Bidvest in 1997 and has held various financial positions within the freight division.