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Bidvest frets over wage demands

Mar 04 2013 16:05 Garth Theunissen, Finweek

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Johannesburg - Bidvest Group, the diversified industrial group whose interests range from automotive sales to food services, says it is concerned that unrealistic wage demands from its South African employees could result in strike action.

“Some of the requests we’re seeing from workers are significantly out of line with reality and where inflation is,” David Cleasby, Bidvest’s financial director, told Finweek in a telephone interview.

“We’re going to have some real issues relating to labour wage incentives going forward. You could call it the Marikana effect.”

Bidvest employs about 105 000 workers worldwide with a significant portion based in South Africa as operations in that country contribute around 45% of the group’s revenue.

South Africa has suffered from mounting labour unrest, particularly in its mining industry where violent strikes spread from the platinum to gold sector following the killing of 34 protesting miners at Lonmin’s Marikana platinum mine in August.

South Africa’s economy grew 2.5% last year, the worst performance since the 2009 recession, while Finance Minister Pravin Gordhan last week lowered his 2013 growth forecast to 2.7%, from an October estimate of 3%.

The government has said the economy needs to grow at 7% annually in order to meet its target of lowering the unemployment rate from 25% to 14% by 2020.

Cleasby’s remarks come on the same day that Bidvest delivered an 11.9% rise in revenue to R75.38bn in the six months ended December 31.

The results showed Bidvest South Africa outperformed the group with the local unit delivering a 12.8% rise in trading profit to R2.03bn, compared with an 8.3% rise in group trading profit to R3.56bn.

Bidvest’s after-tax profit rose 1.1% to R2.377bn.

“Maybe the revenue growth could have been better,” Cleasby said of the results.

Bidvest plans to continue expanding in Latin America following the acquisition of Chile’s Deli Meals in November 2011.

Cleasby said Brazil was the country that offered the best acquisition opportunities.

“Chile is a stepping stone and we want to build off that,” he said. “We were in advanced discussions with a company in Brazil but couldn’t come to terms with the owners.

"We’ve now engaged a full-time person in Brazil to help us find the right business and more importantly, the right management team.”

For more go to finweek.com or follow Finweek on Twitter and Garth Theunissen: @Garthpunk

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bidvest  |  wage demands


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