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SA is not Bidcorp’s China
SA is not Bidcorp’s China
Published Date: 2018-11-29 | Source: Stephen Gunnion | Author: Stephen Gunnion
Trying economic conditions and weak consumer sentiment are weighing on the group's SA operations, but the UK, Europe and Australasia are performing better.
South Africa and China have marred an otherwise positive start to Bidcorp's 2019 financial year. However, the multinational food services group says disappointing showings from the two countries have been countered by better performances from its UK, European and Australasian operations, supported by economic growth and relatively benign food inflation.
In a trading update yesterday, Bidcorp said trading for the first quarter of its 2019 financial year continued to be positive, with organic sales continuing to grow. Currency volatility had impacted its performance though, with constant currency results about 3.1% lower than the rand translated results for the three months.
In Australia, its core foodservice business was doing well, and its fresh and meat businesses were slowly improving. While New Zealand was continuing its solid performance, top-line gains and margin improvements were being offset by higher costs, particularly labour and the costs of recent increased capacity.
In the UK, good summer weather assisted activity levels despite increasing stress in the casual dining space and lower consumer confidence, partly due to the Brexit uncertainty.
The performances of the Netherlands, Belgium, Czech & Slovakia, Poland and Italy stood out in Europe, although cost increases, particularly labour and fuel, were having an impact in many economies experiencing full employment.
The group's operations in South Africa overall underperformed in what it said were extremely trying economic conditions, characterised by stagnant GDP growth and ongoing weak consumer sentiment. Greater China's financial performance was also disappointing, but the business had reacted well in recovering from the effects of dairy market supply dislocation and accordant margin pressures and rising operating and logistics costs.
The group said it was still looking for a buyer for its discontinued Contract Distribution business in the UK after a previous deal fell through. Although the unit had reported an improved trading performance it remained loss-making.
The group closed 2.1% down at R270.90.
Bidcorp trading update - Full of promises and inuendos. No numbers. No saying how investors will react to this. I would say negative-- Bruno van Eck (@brunovaneck) November 28, 2018