Bidvest eyes more hygiene acquisitions
The industrial giant says public health has taken centre stage in the wake of the coronavirus outbreak
Industrial group Bidvest is eyeing further expansion in the hygiene sector as the outbreak of the deadly coronavirus has heightened the need for improved public health.
“Even though the coronavirus has been devastating in many cases, it has highlighted the need for better hygiene across the world,” CEO Lindsay Ralph said, referring to the respiratory disease that has killed thousands, disrupted global trade and raised concerns about global economic growth.
His comments underscore Bidvest’s high-stakes gamble on the hygiene market, which the company has said was poised to grow on the back of urbanisation, out-of-home hygiene, stricter safety standards and ageing populations.
Bidvest's interim earnings have taken a knock. The services, trading and distribution group reported a nearly 11% decline in interim headline earnings per share. Business Day TV spoke to Bidvest CEO Lindsay Ralphs for his assessment.
Bidvest, whose businesses span vehicle dealerships, office furniture and financial services, is already set to be a stronger player in the hygiene industry after agreeing to buy UK-based PHS Group, the biggest hygiene provider in the UK and Spain, for £495m (R9.8bn).
The transaction, which will be funded through a pound-denominated debt, was likely to be completed by the second half of 2020, the company said.
Speaking at the presentation of Bidvest’s interim results on Monday, Ralphs said the hygiene industry was large but fragmented, suggesting his company could play a role in possible sector consolidation.
He said the company, of which cash generated by operations in the six months ended December 31 2019 was R3.8bn, had strong cash flows to support growth into new markets.
In the six months, Bidvest’s headline earnings per share — which strip out certain one-off, non-trading items — fell 10.5% to 563.2c due mainly to accounting changes and losses from Comair, a low-cost airline in which it owns about 27%.
Comair, the operator of Kulula.com and British Airways in SA, reported a R555m half-year loss after SAA failed to make a payment related to a settlement in an anticompetitive behaviour case.
SAA, which has slipped into business rescue, still owes Comair R790m. But Comair has previously said it was uncertain it would recover the money from the troubled state-owned airline.
In the six months, Bidvest grew trading profit 19.8% to R4bn in its half-year to end-December, boosted by its recent acquisitions, including having taken a controlling stake in drug maker Adcock Ingram in 2019.
Revenue went up 9% to R43.7bn, while net debt grew from the previous R8.9bn to R10bn.
The group, which is on course to commission the R1bn liquefied petroleum gas (LPG) import and storage terminal in Richards Bay in the financial year, declared an interim dividend of 282c per share, unchanged from the previous period.
Bidvest’s share price gained 0.72% to R181.29 on Monday. The stock is down 11.47% since the beginning of 2020.