Bidcorp expects higher food inflation in SA

Global food-services group Bidcorp expects rising food price inflation in SA, where food producers and retailers are grappling with higher costs and low selling price increases.

On Monday, Pioneer Foods’ half-year results showed that the food-producer industry is struggling to pass on higher costs to SA’s consumers, who are contending with higher fuel prices and an increase in VAT.

Pioneer said earnings fell in the six months to end-March as costs rose faster than sales partly because of low food price inflation.

But Bidcorp, which makes and distributes food products to restaurants and other clients, said its SA business “is showing improvement despite weak economic conditions”.

“The food inflation trajectory is up, which will start to assist Bidfood,” it said.

The group said its overall results in SA in April “were much improved" compared to a year before.

While China and SA remained tough markets, “monthly performance is starting to improve against last year".

Globally, trading “continues to be positive” in local-currency terms, it said. “Our large UK, European and Australasian businesses continue to perform well.”

Meanwhile, Bidcorp said acquisition opportunities were being limited by “unrealistic” valuations from sellers “at this stage of the cycle”.

This meant fewer bolt-on acquisitions had been concluded. 

In the three months to March, Bidcorp’s Bidfood UK business bought Punjab Kitchen, a niche ready-meals business, for R291m.

Bidcorp said it was in “advanced negotiations” to sell its Bestfood Logistics unit in the UK to a “reputable international buyer”.

The deal would probably be closed in the first quarter of the 2020 financial year.

hedleyn@businesslive.co.za