Bidvest reports boost from acquisition amid Covid-19 headwind
Revenue in the first four months of Bidvest’s financial year are in line with that of 2019, with acquisitions and cost control offsetting the pandemic’s effects
Industrial conglomerate Bidvest, whose interests span cleaning services to freight management, says it has seen stability in its operating profits in the first four months of its new financial year, as new acquisitions and market share gains helped offset the negative effects of Covid-19.
Trading profit and revenue were broadly stable in the four months to end-October relative to the same period of 2019, Bidvest said in a trading update, in spite of negative economic growth, low consumer confidence, and continued restrictions on travel and tourism.
“We prioritised the health and wellbeing of our employees in the face of the continued pandemic and maintained a healthy financial position through strong cash generation,” said CEO Mpumi Madisa. The group had also “digested the significant PHS acquisition while delivering value-added services and products into a changed operating environment,” Madisa said.
In May, Bidvest concluded the acquisition of UK-based hygiene-services business PHS for £495m (R9.1bn), which was both its biggest acquisition to date, and something that has trebled the group’s offshore exposure.
Bidvest said on Friday the performance from PHS had exceeded expectations, adding that growing demand for hygiene services also bode well for continued growth.
The group also said it had gained market share in certain commercial products, such as workwear and do-it-yourself-tools, items that were hit hard during SA's lockdown.
In the group’s freight business — which contributed just over a fifth of trading profit to end-June — continuation of good manganese, chrome and other bulk mineral volumes together with seasonal maize exports and wheat imports, resulted in greater volumes handled by the bulk terminals, Bidvest said.
The Automotive division delivered a good result notwithstanding the subdued trading environment, the group said. This division contributed about 3% of trading profit in the group's to end-June, but about a quarter of group revenue.
New and used vehicle sales declined 22% and 15%, respectively, while aftermarket activity has recovered to about 85% of pre-Covid-19 levels, Bidvest said on Friday.
“Gross profit margin on vehicle and part sales remained broadly stable with servicing margins slightly down,” the statement read.
In September, Bidvest announced it was selling Bidvest Car rental, with the group saying on Friday the disposal process was progressing, and that the business had performed as expected.
In morning trade on Friday, Bidvest’s share was up 3.55% to R173.11, having fallen 15.46% so far in 2020.
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