Bidcorp FY18 headline earnings rise 9% y/y

JSE-listed Bidcorp on Wednesday reported a 9% year-on-year increase in headline earnings a share to R12.86 for the year ended June 30.

Group CE Bernard Berson said the company achieved solid results, backed by strong operational cash flows and a positive trading performance in all regions in which the global foodservice business is represented.

“Europe recorded standout results. UK Foodservice did well. Australia finished strongly. New Zealand again delivered ‘a great performance’. Asia was impacted by the world dairy crisis, supplier dislocation and volatile currencies. South Africa performed well in tough economic conditions,” he said.

Listeria outbreaks in several parts of the world heightened food safety risks. As a result, food testing protocols, systems and recall procedures were re-examined and strengthened.

“South Africa’s listeriosis crisis had a material effects on Crown Food Group (CFG). Bidfood (BF) was impacted to a lesser extent.”

Net revenue rose 8% to R119.4-billion. In constant currencies, revenue was up by 8.5% year-on-year.

Gross profit percentage was maintained at 24% despite a free trade growth strategy that allows some businesses to sacrifice margins to grow volumes and absorb some dairy sector price increases.

Operating expenses were well controlled and the overall cost of doing business remained at 19%, despite higher sales, increased distribution activity and additional invested capacity.

Group trading profit rose 8.7% to R6-billion. Trading margin was maintained at 5%.

Share-based payment costs increased to R99.2-million.

“Bidcorp remains well capitalised, with trading profit interest cover at 25.8 times. We retain adequate headroom for further organic and acquisitive growth while remaining conscious of the need to balance debt capacity and shareholder returns,” he said.

Bolt-on acquisitions were completed in Australia, the Netherlands, Spain, New Zealand, South Africa, Greater China and Turkey. Total investments were R965.6-million.

Pier 7, a small foodservice business based in Germany, and a niche hotel/ restaurant/cafe business in Portugal were the springboards for expansion into new geographies.

Bidcorp declared a final cash dividend of 280c a share, taking the total distribution to 560c.

The company remains focused on growth opportunities.

“Despite some short-term challenges, we remain optimistic [that] the fundamental drivers of our global foodservice markets remain positive, Berson said, adding that the roll-out of Bidcorp’s infrastructure programme would continue.

“Fresh produce, meat, value-add processing and supply chain initiatives remain areas of unexploited potential, which assists in bolstering our value-add proposition. Our objective remains to generate above-average returns in each of our businesses in their home markets. Bidcorp is budgeting for real growth in 2019.”