Bidcorp’s share price increased strongly by 8.5% yesterday after its international food service operations lifted headline earnings a share (HEPS) 15.5% in the year to end-June, despite tough consumer markets where economic growth was anaemic, stagnant or sometimes negative.
The group also rewarded its shareholders, lifting its dividend 16% for the year, after the final dividend was raised to 565 cents a share from 500 cents. Capital expenditure was also higher than usual, at about R6 billion.
“Most of our businesses have improved their performance against previous record achievements of the 2023 financial year,” said CEO Bernard Berson. While the business in China did not report year-on-year growth, its results were considered good considering the difficult market conditions,“ said chief financial officer David Cleasby.
He said in an interview that they had needed to invest more through the year to build capacity for future growth and sustainability and capital expenditure had reduced the bottom line by about 3%.
Infrastructural capacity was grown in many regions, particularly Australia, the UK and Italy. Four small bolt-on acquisitions were concluded in the year.
He said that while it was hard to judge what they would invest in through the new financial year, additional capacity was required in the UK, New Zealand and South Africa. There also appeared to be many acquisition opportunities available.
Two acquisitions had been done post-year end, with a further one to complete in September, and there were more in the pipeline.
New technologies for renewable energy, refrigeration, energy efficiency and logistics optimisation remains a strategic imperative to minimise environmental impact.
Also being investigated were AI solutions to maximise sales, optimise margins, manage inventory and generate operating efficiencies by using the collective knowledge of the businesses in multiple geographies, as well as the significant data holdings.
Continued investment was also being made into BidOne’s ecommerce and customer relationship platforms to enhance customer experiences, streamline operations and promote continuous improvement.
Currency volatility positively impacted the rand-translated HEPS by 6.4%.
The top line grew by 15.1% to 7.5% in constant currency. After adjusting for estimated weighted food-basket inflation, real organic volume growth was just under 6%.
Cleasby said food inflation had fallen through the year, from around 15% to under 2% and it was probably at around zero. The group would find it easier to operate with moderate inflation of between 3 to 5%, he said.
Berson said Europe delivered another record performance with almost every business growing well ahead of 2023. Australasia’s revenue growth moderated in a tough economy, but Australia and New Zealand delivered strong trading results.
The UK delivered a strong second-half to end flat on 2023. Good volume growth from contract wins and acquisitions benefited profitability.
Emerging Markets saw mixed performances with a strong result out of the South African businesses, which was offset by the weaker trading in Greater China.
“Although activity levels were weaker through the back-end of the first half, they recovered into the latter part of second half despite a very poor start to this year’s Northern Hemisphere summer,” said Berson.
Moderating food inflation throughout the year and difficult economic conditions resulted in customers becoming more price sensitive as competition increased.
Cost inflation had eased from the prior year; wage pressures, however, the workforce was being built for stability and the increased scale of the business – labour accounts for two-thirds of the businesses costs.
Berson said activity levels through July and into August had held up reasonably well, considering the poor summer weather in many countries in the Northern Hemisphere.
BUSINESS REPORT