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Johannesburg - Bidvest CEO Brian Joffe has admitted the group's interim results were not up to scratch, promising investors a better performance in the second half.
Bidvest [JSE:BVT] is tipped by market commentators to be one of the JSE's biggest beneficiaries of the 2010 Fifa World Cup, which takes place in June and July.
"We didn't have a great performance operationally during the interim," said Joffe. "We played for a draw, not a win," he said, referring to the 9% increase in headline earnings per share to 495 cents per share for the six months to end-December 2009.
Many of Bidvest's businesses have secured contracts ahead of the World Cup for the provision of hospitality services. For example Bidvest's paper division, BidPaper Plus, is responsible for the distribution of match tickets.
Joffe said local businesses were too focused on the foreign visitors expected to descend on South Africa during the tournament.
"We will have a fantastic time with or without the foreigners. There are plenty of opportunities for us either way," he said.
Joffe was reluctant to estimate the contribution World Cup-related business could make to financial year-end results in June 2010.
In the mood for shopping
Joffe also hinted that Bidvest is looking to make an acquisition. He gave no indication of the size of this potential purchase. However, the group's financial director David Cleasby said Bidvest's balance sheet had "significant capacity for corporate action".
Bidvest reported a 25% decline in net debt to R5.9bn for the period under review. This is despite the acquisition of European food supply and catering company Nowaco in 2009. The cost amounted to R53.4m and had a negative impact on headline earnings per share.
In terms of preferred areas for acquisition, Bidvest favours businesses that will bulk up its food and catering offering in any geographical region.
"We have done a lousy job of diversifying in Africa so far," said Joffe.
Alternatively, Bidvest may choose to enter an entirely new business in South Africa.
Craig Pheiffer from Absa Investments said Bidvest will most likely expand its food services offering, because it will link to longer-term strategic goals for the company.
"Bidvest could be a very different business in the next five years," said Pheiffer.
Pheiffer said that Joffe, who is regarded as a strategic compass for the massive industrial, may look to retire at the time and speculation in the market leans towards the possibility of splitting Bidvest into two separate companies. One of these would be focused on food services and catering.
"They may look to bulk up the division ahead of a move like that," said Pheiffer, adding that this is still pure speculation.
- Fin24.com
