| Mon 2 Mar 2009, 8:50 | | BVT - The Bidvest Group Limited - Bidvest`s basic earnings per share rise 8 7% |
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BVT
BVT
BVT - The Bidvest Group Limited - Bidvest`s basic earnings per share rise 8,7%
for half-year to December 2008
The Bidvest Group Limited
Registration number 1946/021180/06
Share code: BVT ISIN: ZAE000117321
("Bidvest")
BIDVEST`S HALF-YEAR RESULTS SHOW 8,7%
RISE IN BASIC EARNINGS PER SHARE
Bidvest`s basic earnings per share rise 8,7% for half-year to December 2008.
Trading profit rises 6,4% to R2,6 billion.
HIGHLIGHTS
* Basic earnings per share up 8,7%, but headline earnings dip 8,9%
* Revenue up 11,3% to R60,0 billion, reflecting market share gains
* Trading profit moves 6,4% higher to R2,6 billion
* Good contributions from Bidserv, Bidvest Australasia and SA food businesses
* Translation of offshore earnings buoyed by a weaker rand
* Balance sheet remains strong and working capital management a key focus
area
* Bidvest positioned to exploit opportunities presented by tough times
* Interest cover at 4,7 times reflects adequate borrowing capacity
* Distribution of 190,0 cents per share
OVERVIEW
Bidvest CE Brian Joffe today announced "solid trading results" for the half year
to December 31 2008. Basic earnings per share rose 8,7% to 530,4 cents, though
headline earnings per share dipped by 8,9% to 454,0 cents. Revenue of R60,0
billion was up 11,3%, while trading profit rose 6,4% to R2,6 billion.
Market share gains in many instances contributed to revenue growth.
Joffe said the decline in headline earnings was partly due to the expensing of
R165,3 million in closure and reorganisation costs within motor retailing and at
the UK foodservice and Ontime Automotive businesses.
He added: "Without these costs, headline earnings per share would have decreased
by 0,8%. Decisive actions were deliberately taken to put the Group in a stronger
position at a time of uncertainty and worldwide economic recession. Difficult
times provide opportunity, and Bidvest is alert to the potential this offers."
Joffe noted good contributions from Bidserv, Bidvest Australasia and the South
African food businesses.
Underperforming areas included 3663 First for Foodservice in the UK and Bid
Auto. Motor retailing was impacted by high interest rates, low consumer spending
and vehicle financing constraints. The drop in Bidvest`s trading margin - from
4,6% to 4,4% - was impacted by the 3663 in the UK and Bid Auto`s
underperformance.
Severe recession in the UK took its toll on the UK businesses, though a weaker
rand (R15,21 against sterling versus R14,14 a year earlier) was positive for the
translation of UK earnings.
Capital expenditure in all operations is being reviewed.
Joffe commented: "Working capital management remains an area of critical focus
... Tightening controls to improve returns on funds employed remains
management`s number one priority."
Net debt rose to R7,9 billion (June 2008 R5,6 billion), driven by seasonal
working capital demands. Interest cover at 4,7 times reflects adequate borrowing
capacity. Finance charges increased 26,4% to R562,9 million as a result of
higher interest rates and the refinancing of term loans.
Bidvest`s conservative attitude to debt remains appropriate in the current
climate.
PROSPECTS
Joffe expects a continuation of challenging economic conditions and continuing
fallout from the global financial crisis. However, "the Group remains committed
to its decentralised business model as the best foil to risks associated with
the worldwide economic environment. Our divisions continue to optimise
opportunities across various geographies and industries whilst remaining focused
on basic deliverables".
Bidvest`s balance sheet remains strong and is appropriately capitalised. The
Group will continue to seek strategic acquisition opportunities. Bidvest remains
focused on improving the management of working capital while pursuing increased
incremental returns from recent investments.
The `World Cup effect` is gaining momentum in South Africa and Bid Auto`s market
should benefit from falling interest rates.
Internationally, Bidvest`s Australian and New Zealand businesses will seek
further market share gains whilst the Hong Kong and Singapore units remain a
springboard for regional expansion. Bidvest`s UK businesses are seeking improved
medium-term results through the rationalisation undertaken.
Joffe added: "We remain committed to sustained shareholder value creation
through superior trading performance and returns improvement, whilst ensuring a
prudent capital structure with appropriate leverage."
DISTRIBUTION
Bidvest will make an interim distribution of 190,0 (2007: 220,0) cents per
share.
DIVISIONAL REVIEW
Bidfreight achieved reasonable results, though margin pressure and contracting
volumes affected several operations. Trading profit rose 10,5% to R365,5
million. Revenue was marginally higher at R10,7 billion. Bulk liquids benefited
from increased capacity and rental adjustments. SA Bulk Terminals returned good
results and SACD Freight performed satisfactorily. Commodity exports are down
with no sign of an export uptick. Port Operations saw declines in the export of
steel, forest products and ferrochrome. Imports of cement and rice also fell.
Bulk Connections performed satisfactorily, though manganese volumes tailed off.
Rennies Distribution Services performed below expectation. Clearing and
Forwarding was impacted by flat seafreight volumes and a 15% fall in airfreight.
Marine did well and Manica showed good improvement.
Bidserv put in a strong performance with a 57,9% return on funds employed.
Trading profit rose 27,2% to R489,4 million while revenue grew 23,3% to R3,6
billion. Prestige did well despite cleaning sector cost pressures. Bid Travel
Services was impacted by the economic slowdown. TMS benefited from investment in
additional capacity and Steiner showed some growth. Laundry division was
impacted by falling hotel occupancy rates though a buoyant garment rental market
was beneficial. Industrial products continued to perform exceptionally well and
the results of Konica Minolta and Oce were well up. Magnum put in another
improved performance, but Provicom was weaker. Global Payment Technologies
recovered strongly. BidAir improved and its new management team is expected to
maintain momentum. TopTurf met expectations while Hotel Amenities Supplies was
impacted by lower occupancy rates. Bidvest Bank and Master Currency performed
exceptionally well, driven by product innovation and branch openings.
Bidvest Europe`s results were disappointing, except for the businesses in
mainland Europe. Overall trading profit fell 3,4% to R396,3 million. Revenue
rose 20,8% to R19,3 billion. The UK`s severe recession impacted 3663 First for
Foodservice and the chief challenge was margin pressure. Corrective action was
reflected in lower-than-budgeted overhead costs. The Barton Meat Company was
closed and, together with other rationalisation costs, an exceptional charge of
GBP11,8 million was taken. Trading profit fell at the Wholesale division while
Logistics made a loss. Trading profit at DeliXL Netherlands was well up on the
previous year. At Deli XL Belgium sales and trading profit were slightly behind
projections, but well ahead of the previous year. In Dubai, Horeca grew revenue
at improved margins.
Bidvest Asia Pacific registered good overall performance, growing revenue by
33,7% to R8,8 billion. Trading profit rose 13,7% to R285,7 million.
Consolidation of divisional figures masks under-performance, particularly in
Singapore and to a lesser degree Hong Kong and China. Bidvest Australia returned
pleasing results in a stalling economy. Revenue rose 15,1% to A$819,8 million.
Trading profit of A$31,1 million was up 15,3%. Organic growth drove sales,
though food inflation buoyed results. Foodservice performed well, Hospitality
had a strong second quarter and QSR achieved a satisfactory result. Bidvest New
Zealand performed satisfactorily. Trading profit rose 12,1% to NZ$9,9 million
and revenue increased 15,3% to NZ$215,5 million. All divisions performed ahead
of expectations in a contracting economy. Angliss Singapore suffered a trading
loss of S$276k following second quarter losses arising from falling food
commodity prices. Revenue rose to S$166,4 million. Angliss Hong Kong achieved
profit of HK$21,3 million (2007:HK$24,4 million) on revenue of HK$866,0 million.
Profitability was impacted by the dumping of stock by competitors as banks
squeezed credit and demand fell for western-style product.
Bidfood put in a satisfactory performance, with revenue up 20,7% to R2,7 billion
while trading profit rose 16,9% to R217,6 million. Caterplus and Caterplus and
Speciality achieved continued growth in a challenging environment, with trading
profit rising by 16,6% to R128,6 million off revenue of R1,7 billion, a rise of
15,3%. Caterplus grew market share by increasing the average spend per customer
and the average value of each drop. Rigorous expense management and improved
cash flow contributed to a satisfactory performance, despite capacity
constraints in several branches. New Cape premises are nearing completion and
new facilities are planned for some other regions. Speciality delivered
satisfactory results. The slowing economy had particular impact on consumers in
the middle and upper income bracket who drive demand for Speciality`s
aspirational brands. Speciality limited the impact through aggressive brand
promotion and efficient distribution. Bidfood Ingredients achieved pleasing
results, with trading profit up 17,4%. All trading businesses performed well
with the exception of NCP Yeast, which was unable to timeously pass on abnormal
raw material price increases. Factories grew profitability, with a notable
turnaround in Chipkins Bakery Ingredients.
Bid Industrial & Commercial Products delivered a satisfactory overall result in
largely adverse trading conditions. Trading profit eased 1,4% lower to R324,9
million off revenue of R5,0 billion, an 8,2% increase. A falling copper price
and a slowdown in the housing and retail sectors created challenges. The
Electrical Wholesale division grew revenue by 6,0% while trading profit fell
2,5%. Falling copper prices precipitated a reduction of inventory levels. By
December, stock holdings had fallen by R112 million. Walton`s did well driven
higher by store openings and refurbishments. Kolok`s significant improvement was
attributable to improved trading conditions and the benefits of a weaker rand.
Trading profit and revenue at Furniture were below projections. Stock levels are
being re-evaluated. Afcom GE Hudson achieved pleasing growth in trading profit
while well-controlled expenses led to improved performance at Buffalo Executape.
Vulcan Catering Supplies achieved acceptable results despite a tight market.
Bidpaper Plus returned a solid result in a challenging market, with revenue up
14,4% to R1,2 billion while trading profit rose 2,9% to R130,3 million. Results
include the contribution of newly acquired Rotolabel and reflect the
inflationary effect of input cost increases. Products linked to credit
transactions were impacted by credit constraints while businesses also felt the
knock-on effects of a retail sector under pressure. Strong improvement was seen
in stationery distribution following an aggressive drive by a revitalised
Croxley brand. The Rotolabel acquisition and consolidation of label factories in
Gauteng drove improvements in the labels and packaging business. Traditional
print put in a weaker performance, though Cape rationalisation is now complete
and related costs were absorbed in the period. The laser and mail business
achieved a measure of earnings growth.
Bid Auto`s trading profit of R214,4 million was down 39,4%. Revenue fell from
R10,0 billion to R8,8 billion. Motor Retail was severely affected by a 24,2%
drop in new vehicle sales, giving rise to excessive levels of inventory,
discounting and overtrading and much-reduced dealership trading margins.
Burchmore`s Car Auctions produced pleasing results due to an increase in bank
repossessions and the success of its marketing programme. Used Vehicle
departments are beginning to show volume and margin improvement while Parts and
Service departments continue to produce strong results. The Import and
Distribution business was impacted by losses on the importation of Chinese
vehicles due to a weaker rand and declining sales. Sixteen 16 Value Serve
outlets and seven Value Centres were closed at a cost of R30,3 million following
substantial losses by these networks. Yamaha delivered trading profits
significantly behind those of the prior year. Heavy Equipment continues to grow
and recorded a pleasing result. Financial Services performed well, considering
current business conditions. Insurance operations were, however, impacted by a
mark-to-market adjustment of the equity portfolio. Increased impairments for
doubtful debts contributed to a poor performance by McCarthy Finance. Fleet
Solutions delivered impressive profit growth. Car and Van Rental profitability
declined due to an over-fleeted rental market. Working capital management has
been a key focus area, resulting in a reduction in inventory levels.
Bidvest Namibia`s excellent results were buoyed by a strong performance at
Bidfish. All other businesses performed in line with expectations. Bidvest
Namibia`s listing is expected in the fourth quarter of the calendar year.
At Corporate, Bidvest Property Holdings continued to successfully manage and
grow its strategic portfolio. UK-based Ontime Automotive was impacted by the
GBP3,4 million cost of exiting the volume transport business, rationalisation
of Rescue and Recovery depots and the wind-down of a major Parking Solutions
contract. A slowing prestige vehicle market impacted Specialist Transport. The
associate investment in Enviroserv Limited was sold with effect from November
2008 for a profit of R391,8 million.
ISSUED ON BEHALF OF: THE BIDVEST GROUP LIMITED
BY: CLEAR DISTINCTION COMMUNICATIONS
BIDVEST CONTACTS: Brian Joffe (CE)
Tel: 011 772 8704
David Cleasby (FD)
Tel : 011 772 8706
Mobile: 083 228 1810
CONSULTANCY CONTACT: Carol Dundas
Tel: 011 444 0650
Mobile: 083 447 6648
02 March 2009
Sponsor: Investec Bank Limited
Date: 02/03/2009 08:50:01 Produced by the JSE SENS Department.
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