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Bidvest profit up as SA operations record revenue rise

Johannesburg – Bidvest Group [JSE:BID] has reported profit growth across five of its divisions. However, the performance of its operations in Namibia and its office and print business disappointed.

According to the group’s unaudited interim results for the six months ended December 31 2016, revenue was up 4.1% to R36bn, operating profit rose 3.2% to R2.8bn and earnings before interest, tax, depreciation and amortisation increased 2.3% to R3.63bn.

Headline earnings per share increased by 4.4% to 510.3 cents. An interim dividend of 227c was declared.

The gains of the trading, distribution and services group were attributable to its South African operations, which showed a 6.2% increase in operating profit and a revenue rise of 3.6%. “Despite the competitive and difficult operating environment, five of the divisions managed to maintain or increase margins through enhanced efficiencies and cost control,” said the group.

However, the performance of Bidvest Namibia, of which the group owns 52%, was impacted by declining fish quotas and tough economic conditions in the country, said the group. “Numerous options are being considered to improve the current situation and return these assets to profitability.” Operating profit declined by 80.6%.

“All operations apart from Properties, reported a decline in profitability, with Bidfish and Food and Distribution generating losses for the six months,” the group explained. “The extremely difficult trading conditions are expected to continue in the short term.”

READ: Bidvest can tap over R13bn for acquisitions outside SA

The group has taken measures to improve performance. So far the size of the vessel fleet is being reduced and cost reduction programmes have been put in place.

The office and print division’s revenue declined by 1.4%, as it recently disposed of its distributor, Kolok, in Mozambique. “The division’s trading profit result was negatively impacted by currency movements in Konica Minolta and Kolok, which masked solid performances by the other operations,” said Bidvest.

The group’s investment income was up 7.5%. Bidvest holds investments in Adcock Ingram (38.4%), Comair (27.2%), Cullinan Holdings (19.5%) and Mumbai Airport (6.75%) among others.

“The investments in Adcock Ingram, Comair and Cullinan benefited from positive mark-to-market adjustments of R319.8m, relative to negative adjustments of R216.9m in the corresponding period,” said the group.

In October 2016 Bidvest finalised its acquisition of Brandcorp, which will be part of its commercial products. The balance sheet remains robust and net debt levels are acceptable at R8.4bn given Brandcorp’s recent inclusion,” said the group.

The group is satisfied with the net debt to equity ratio at 42.7%, which is “comfortably above the group’s conservative self-imposed targets”. This will provide “ample capacity” for further expansion, explained Bidvest.

The group expects improvement in trading conditions, which will be brought on by drought relief and improved business confidence. 

Bidvest shares were trading at R163.00 at 13:00 on the JSE. 

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