Johannesburg - Diversified services company Bidvest [JSE:BVT] has reported a marginal increase in profits for the six months to December 2009 after the recession in Southern Africa and other operational areas depressed demand.
Trading profit increased just 0.1% to R2.6bn in the interim period.
Bidvest's headline earnings per share increase 9% to 495c for the six months to end-December 2009. Revenue in the same period dropped 6.5% to R56.1bn.
"The strong rand negatively impacted the translation of the international operations by R3.4bn," said Bidvest.
The company boosted distribution by 9% to 207c/share.
These are Bidvest's first results to incorporate the earnings contribution of Nowaco, which is a Eastern European food supplier and caterer acquired in 2009.
Nowaco added R2.1bn in revenue to the bottom line and R31.2m to profit. Acquisition costs amounted for R53.4m.
"These results met pre-acquisition expectations despite tougher economic conditions," said Bidvest.
"We have exciting potential in Eastern Europe - not only in their home countries but as the springboard to growth in other geographies," said Bidvest CEO Brian Joffe.
Joffe has said that Eastern Europe is a strategic growth area for Bidvest.
The group's debt position has improved despite the drain from the Eastern Europe acquisition. Net debt has fallen to R5.8m (2008: R7.9m), which translates into a net debt to capital ratio of 37.2% (2008: 56.7%).
The group said that it favoured a more conservative approach to gearing in the more strained economic climate.
Bidvest's Asia Pacific operations was the star of the reporting period. Revenue increased 1.4% to R8.9bn and trading profit was up 29.8% to R370.9m. The operatons in Australia - which focus on food supply and catering - performed particularly well and reported a gain in market share.
Bidvest's automotive retail division, which is headed by the McCarthy brand, reported revenue of R8.7bn - which was below the group's expectations for the period. However, trading profit was higher by 29.9% to R278.4m. The group's sales of new cars remain down, despite restructuring efforts. Demand for used cars has improved - an experience reported by most automotive retailers over the past six months.
Analysts Fin24.com has spoken to expect Bidvest to report a better numbers in the second half of the year. One major fcator that is expected to reflect positively on the company is the Fifa World Cup 2010, which kicks off in June.
Bidvest has a diversified service offering, which covers catering, cleaning, tourism and car rental. Market commentators have repeatedly said that the diversified giant is a favourite to most gain from the soccer tournament when compared to its peers on the Johannesburg Stock Exchange.