Bidvest warns of Covid-19 impact


Bidvest warns of Covid-19 impact

Published Date: 2020-09-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Bidvest warns of Covid-19 impact

The industrial services and trading group has booked a number of impairments and additional charges as it right-sized its operations.

Bidvest will report a sharp fall in annual earnings due to provisions and impairments, many as a direct result of Covid-19. However, it maintains that its trading performance for the year to end-June was credible considering the already constrained economy and the additional impact of the pandemic in the final quarter.

In a trading statement, the industrial services and trading group said it had reviewed all its business and right-sized its operations to make sure their operating models remained relevant and future-fit. It took the decision to divest of its Bidvest Car Rental and Bidvest Services operations, with Bidvest Car disclosed as a discontinued operation in its results.

Impairments totalling R1 billion were also recognised as a result of lower forecast cash flows impacted by the pandemic, the expected slowdown in economic activity as well as higher discount rates. It incurred R1.6 billion of Covid-19 charges, including its R400 million Bidvest Covid-19 Fund, a reduced price for its stake in the Mumbai International Airport and once-off restructuring charges resulting from its business review.

The group said it would report a basic loss per share for the year of between 130c and 150c, partly due to the operational losses and impairments recognised for the discontinued car rental business. Basic earnings per share (EPS) from continuing operations would be 95-97% down from the R11.34 previously reported, including a R241 million impairment recognised for Comair and R1.2 billion in capital impairments and business disposals.

Normalised headline earnings per share for the year, which exclude the impact of Covid-19 as well as acquisition costs, amortisation of acquired customer contracts and adjustment for its share of Comair's SAA impairment, are expected to be 22% to 24% lower than the R13.34 reported last year. It uses the normalised number to assess the underlying business performance of its continuing operations.

Bidvest said at the onset of the national lockdown it had proactively bolstered its liquidity position by securing R4.5 billion in additional general banking facilities, taking committed facilities to a total of R11.6 billion.

Bidvest's results are scheduled for release on Monday. Its shares closed 1.3% down at R148.24 yesterday. The trading statement was released after the market close.

Similar Stories