incoming CEO Mpumi Madisa will take the reins as Bidvest’s group recovers from the impact of Covid-19.
Bidvest says its services businesses provided a defensive underpin to its full-year results as Covid-19 added to the headwinds presented by an already constrained local economy. It has prepared for the fragile operating environment that it expects to persist by right-sizing its operations, trimming its workforce and making itself ‘future-fit’ to remain competitive.
The services, trading and distribution group described its financial performance as credible, with the impact of the national lockdown on trading broadly neutralised by the first-time consolidation of Adock Ingram to its results and two months’ contribution from recently acquired European hygiene service provider PHS Group. Its services businesses, comprising its Services, Freight and Financial Services divisions, delivered almost two-thirds of profit, with a strong performance from Irish facilities management business Noonan. Profitability in SA was impacted by no travel- and hospitality-related activity in the final quarter of its year.
Freight posted what it said was a resilient result despite lower trade activity through the country’s ports. Branded Products’ result was a combination of a solid Adcock performance while the balance of the division bore the brunt of lower demand and trade restrictions during lockdown. In Financial Services the negative impact of a complete drop-off of foreign exchange demand in the last quarter and fleet contracts rolling off, more than outweighed higher investment income.
Revenue rose 0.5% to R76.5 billion for the year to end-June and trading profit from continuing operations was 3% higher at R6.9 billion – excluding R1.6 billion in Covid-19-related charges. Including the Covid-19 charge, it declined by 20%. Headline earnings per share (HEPS) fell 60% to 553.2c while normalised HEPS came in 23% lower at 1,028c. Normalised headline earnings exclude acquisition and amortisation costs and are adjusted for the company’s share of Comair’s SAA impairment and Covid-19 pandemic charges, reflecting the underlying business performance of its continuing operations.
The R1.6 billion of Covid-19 charges included its R400 million Bidvest Covid-19 Fund, set up to assist local employees not working due to the lockdown restrictions. It also received a reduced price for its stake in the Mumbai International Airport and once-off restructuring charges resulting from a business review that resulted in it divesting of its Bidvest Car Rental and Bidair Services operations. Bidvest Car was accounted for as a discontinued operation.
The company generated R9.2 billion in cash from its operations, an improvement of 38%, while free cash flow increased by R1.4 billion to R3.7 billion. Its balance sheet remained strong with moderate gearing. However, it hasn’t declared a final dividend due to the uncertain environment and restructuring actions taken over the year.
Following the acquisition of PHS Group and a few bolt-on deals, Bidvest said it would continue to invest strategically to generate sustainable profits for the long term.
Bidvest’s basic-need services and everyday essential product ranges should stand us in good stead, especially when coupled with an innovative, value-adding mindset,” chief executive Lindsay Ralphs said. “In recent weeks, we have noted anecdotal market share gains across many of our Commercial Products businesses as we build stock available to trade.”
Ralphs, who retires at the end of the month, said the appointment of Mpumi Madisa as his replacement coincided with tremendous change. Madisa was appointed CE-designate in March 2019.
I believe her exceptionally strong knowledge of our businesses and markets positions her well to lead Bidvest into its next chapter of growth and sustainability,” Ralphs said. “Her extensive strategic capability will certainly prove beneficial to our large and varied stakeholder base.”
Bidvest’s shares rallied 5.9% to R152.24 yesterday.
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