Bidcorp, the food services company says a majority of its customers have emerged from hibernation and sales continue to recover.
Bidcorp says a significant decline in people eating out, visiting pubs, travelling and staying in hotels put the brakes on what had been a pleasing financial performance across its business up until February. Lockdown restrictions on all these services made it even worse, with the result that its full-year earnings have come in sharply lower. However, the food services company says most of its customers have reopened and emerged from their “hibernation” faster than expected.
Bidcorp, which has operations across the globe, said fourth-quarter revenue declined by 28% from a year earlier, with sales for the week to 5 April coming in at just 37% of the corresponding week last year. They recovered to 71% by the end of June and had continued to improve to about 90%.
The lower fourth-quarter sales left full-year revenue 6.3% lower at R121 billion while trading profit declined 38% to R4.2 billion. Profit from continuing operations dropped 68% to R1.56 billion and headline earnings per share came in 49% lower at 741.3c. Cash generated by its continuing operations rose 27% to R8.4 billion and free cash flow improved to R3 billion. Still, it hasn’t declared a final dividend, leaving its total payout for the year at 330c, down 48% from last year.
The Best Food Logistics and PCL distribution businesses, which it exited in March, were accounted for as discontinued operations.
Bidcorp said its businesses opportunistically pivoted into new channels during the lockdown, such as home delivery and supply to other retail related channels. However, the overall contribution from these initiatives was small. Some of its businesses also gained market share as weaker competitors fell away.
Bidcorp said it did not expect any major long-term fundamental shift in consumer behaviour away from eating-out-of-home, which was supported by early anecdotal evidence. Small aspects of its business model were continually being modified but it said major structural changes were not required.
Our current focus is to anticipate the likely “new normal” that will exist post the short-term effects of the Covid crisis and to scale our activities accordingly and responsibly,” the company said. “Our businesses are preparing to ride out the next phase of the economic recovery mindful that activity levels will fluctuate as further waves of the Covid pandemic arise.”
Main Image; Bidcorp Group
