Johannesburg - Services and distribution group Bidvest on Monday reported a 12% decline in diluted headline earnings per share to 924.9 cents per share for the year ended June 2009 from 1051.0 cents a year ago.
A final cash distribution out of share premium of 190 cents per share was declared, compared with 275 cents a year ago.
The group reported revenue up 1.8% at R112.4bn, while operating profit declined to R4.935bn from R5.344bn before. Trading profit showed a 3.7% decrease to R5.1bn.
The group said respectable trading results were delivered for the year in extremely tough economic conditions. The decline in headline earnings is in part due to the expensing of R118.3m in closure and reorganisation costs in certain operations within motor retail, the UK foodservice and Ontime Automotive businesses as well as the impact of higher interest rates in the first half of the year.
Decisive action was taken to put the group in a stronger position at a time of uncertainty and worldwide economic recession. Difficult times provide opportunities and Bidvest is alert to the potential this offers, it said.
The group said trading profit reflects resilient contributions from Bidfreight, Bidserv, Bidvest Asia Pacific and the South African food businesses, while Bidvest Namibia performed exceptionally well.
Areas of under-performance were principally in 3663 and Ontime Automotive in the UK, Bid Industrial and Commercial Products and Bid Auto.
Despite slightly lower trading profits, cash generated by operations remained strong at R6.8bn - an increase of 10.9%.
3663's performance declined markedly as the severity of the recession in the UK impacted consumer confidence and compounded weaker trading, necessitating the closure and reorganisation of certain operations.
Bid Industrial and Commercial Products was impacted by volatile metal prices and ensuing inventory impairments and weak consumer demand in the furniture sector.
Speed of recovery uncertain
Bid Auto's poor trading performance can largely be attributed to the high interest rate environment, a sharp decrease in consumer spending and consumers' inability to obtain vehicle finance, the group noted.
Looking ahead, Bidvest said the challenging economic conditions created by the fallout from the global financial crisis appear to be abating. However, the speed of recovery remains uncertain. The group's decentralised business model has proven resilient at a time when others appear to be faltering.
"Our divisions continue to optimise opportunities across various geographies and industries while remaining focused on the basic deliverables. Our balance sheet remains strong, our gearing remains conservative and we have the capacity to seek out further strategic acquisition opportunities," it said.
The benefits of improved cash flow generation and a lower interest rate environment are expected to lower finance charges going forward.
The recent Confederations Cup has demonstrated the potential that South Africa can derive from an event like the 2010 World Cup. "Our plans are gaining momentum. Bidvest continues to position itself to take advantage of such opportunities, many of which have already been contracted," it said.
The UK economy appears to have stabilised, though Benelux is expected to continue to slow. The tough decisions taken by the UK businesses were necessary and we are optimistic the rationalisation programme undertaken will yield improved results.
The group is also confident that its Australian and New Zealand businesses will entrench their leading market positions and are well placed for further expansion through market-share gains, growth in revenue, margin enhancement and improved operational efficiencies. Its established bases in Hong Kong and Singapore continue to evolve and remain the springboard to growth in other geographies in the region.
Both new and used vehicle sales should benefit from higher levels of business and consumer confidence, as well as the lower interest rate environment.
- I-Net Bridge