Bidvest overcomes difficult economy


Bidvest overcomes difficult economy

Published Date: 2019-09-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Bidvest overcomes difficult economy

The industrial group has grown earnings following strong performances from its services businesses.

Bidvest has released what it calls credible results for the year to end-June in a market characterised by weak economic growth as well as significant business and fiscal uncertainty and volatility.

The industrial services company has interests across a number of sectors, including consumer, industrial and electrical products, financial services, freight management, travel and the auto sectors, putting it at the mercy of the economy.

Group revenue was flat at R77.2 billion for the year but trading profit increased by 3.5% to R6.7 billion, with its gross and trading profit margins both improving. It said its combined services business, which include Services, Freight and Financial Services and represent two-thirds of operational profit, grew trading profit by 6.4%, while profit from its trading and distribution businesses contracted slightly.

Headline earnings per share (HEPS) rose 9.8% to 1,352.1c and normalised HEPS, which exclude acquisitions costs and and number of other once-off items, increased by 5.2%. It's raised its final dividend by 5.6% to 318c per share.

Bidvest's operations generated cash of R7.1 billion over the period and it spent R5 billion on acquisitions and capital expenditure. It said it maintained a strong balance sheet with conservative net debt R7.8 billion.

The group said associate companies, those which it doesn't own a majority stake in, reported strong earnings growth over the year. Strong profitability gains were achieved at pharmaceuticals group Adcock Ingram while Comair recognised a successful claim awarded against SAA, which increased Bidvest's share of profits. It raised its stake in Adcock to above 50% over the year and will in future consolidate it into its own accounts. Amongst its acquisitions, it acquired fleet management and logistics business Eqstra for an enterprise value of R3.1 billion. The deal is expected to become effective towards the end of the calendar year, pending the necessary approvals.

Bidvest said it was well positioned to participate in pockets of activity and opportunities as they arose. It said it would also continue to strategically invest to generate sustainable profits for the long term, while remaining cognisant of suitable timing for embarking on large organic investments such as its flagship R1 billion liquid petroleum gas (LPG) storage project, which remains within budget and one time. The 22,600 ton facility in Richards Bay will significantly increase the supply of LPG to the country and allow for fuel exports to neighbouring countries.

Its shares closed 2.4% higher at R182.96 yesterday.

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