| Mon 27 Feb 2012, 7:16 | | BVT - The Bidvest Group Limited - Bidvest`s normalised headline earnings per |
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BVT
BVT
BVT - The Bidvest Group Limited - Bidvest`s normalised headline earnings per
share up 13,6% for half year
THE BIDVEST GROUP LIMITED
("Bidvest")
(Registration number 1946/021180/06)
Share code: BVT
ISIN ZAE000117321
BIDVEST`S NORMALISED HEADLINE EARNINGS PER SHARE UP 13,6% FOR HALF YEAR
Bidvest`s half-year results to December 31, 2011, showed a 37,5% increase in
headline earnings per share (HEPS) to 742,3 cents. On a normalised basis, HEPS
were up 13,6% to 613,4 cents.
HIGHLIGHTS
- Headline earnings per share (HEPS) rise 37,5% to 742,3 cents
- Basic earnings per share up 31,2% to 710,8 cents
- R399,1 million realised on sale of half of Group`s stake in Mumbai
Airport
- Normalised HEPS* 13,6% higher at 613,4 cents
- Normal dividend per share up 24,4% to 280,0 cents
- Special dividend per share of 80,0 cents
- Revenue rises 15,1% to R67,3 billion
- Trading profit up 14,9% to R3,2 billion
- Trading margins maintained at 4,8%
OVERVIEW
Bidvest CE Brian Joffe today announced "a pleasing trading performance coming
off a high base" for the six months to December 31 2011. The result was
enhanced by profit of R399,1 million on the sale of 50% of the Group`s
interest in Mumbai International Airport Private Limited (MIAL).
Headline earnings per share rose 37,5% to 742,3 cents while basic earnings per
share (EPS) rose 31,2% to 710,8 cents. Normalised HEPS* (excluding the MIAL
profit) was up 13,6% to 613,4 cents. EPS were impacted by an impairment of the
Group`s Comair investment of R96,7 million.
Joffe noted that southern African trading conditions had improved but sectors
like light manufacturing, construction and discretionary consumer spending
remained weak. Asia Pacific continued to show solid results though Singapore`s
performance lagged. Trading in the Australian market remained tough but the
business continues to perform well. Bidvest Europe`s results reflected an
improvement at 3663 Wholesale which was offset as Nowaco in Czech Republic and
Deli XL Netherlands reported lower trading profit. Bidvest Namibia`s growth
trajectory continued.
The average rand exchange rate was weaker against the major currencies in
which Bidvest operates. The positive impact on translation of foreign earnings
was equivalent to 3,7% of normalised HEPS, with normalised HEPS on a constant
currency basis up 9,9%, calculated at 593,1 cents per share.
Financial performance
Revenue grew 15,1% to R67,3 billion (2010: R58,5 billion) and trading profit
rose 14,9% to R3,2 billion (2010: R2,8 billion). Margins were maintained at
4,8%.
Higher trading profit was partly offset by an increase in net interest paid of
R60,0 million, mainly attributable to additional debt assumed for the Seafood
Holdings acquisition of January 2011 and the R1,6 billion spent on the Dinatla
share buyback in May 2011. This was cushioned by the interest saving on the
net proceeds received on the MIAL disposal. Normalised interest cover remained
flat at 8,8 times (2010: 9,1 times). The Group continued to benefit from
exposure to the short end of the funding market.
Associate earnings fell 48,5%, primarily a result of the Group`s share of
losses at Comair.
Net debt increased to R5,6 billion (2010: R4,6 billion) compared to R5,0
billion at June 2011.
Cash generated by operations before working capital changes improved 9,7% to
R4,0 billion. Joffe said gains made in reducing working capital over the past
two years had now reversed in line with more normalised seasonal patterns on
the back of robust growth.
The Group used working capital of R1,6 billion compared to R1,0 billion in
2010. Net capital expenditure on property, plant, equipment and intangibles
was R1,4 billion (2010: R1,3 billion), the primary driver being the refleet of
Budget Rent-a-Car.
Ratings upgrade
In December 2011, Fitch upgraded the national long-term rating to `AA-(zaf)`
from `A+(zaf)` and national short-term rating to `F1+(zaf)` from `F1(zaf)`.
The upgrade was prompted by Bidvest`s steady through-the-cycle credit profile,
which outperformed that of national peers.
PROSPECTS
Local economic conditions have improved and though growth is low, Joffe said
management are quietly optimistic recent momentum would continue. "Exposures
to industries such as construction are expected to improve in the medium term
as the benefits of the highly awaited government infrastructural programme are
felt," he added.
Discretionary consumer spend should improve, benefiting automotive retailing
and foodservices.
Improved activity levels are expected within Bidvest`s European geographies,
but consumer confidence remains fragile. In Asia Pacific, management are
confident of further growth.
Joffe added: "Management continues to retain a critical focus on asset
management and cost efficiency... Our financial position is sound and we are
well capitalised, with ample capacity to fund expansion. Notwithstanding
difficult and volatile economic environments, management see genuine
opportunities to further expand our geographic footprint and product and
service offering, enabling continued real organic and acquisitive growth."
DISTRIBUTION
A normal interim cash dividend of 280,0 cents per share was awarded (up 24,4%)
along with a special dividend of 80,0 cents per share.
DIVISIONAL REVIEW
Bidvest Commercial Division (formerly Bidvest South Africa)
The division produced solid results, with revenue 10,0% higher at R32,2
billion (2010: R29,3 billion) and trading profit up 13,6% to R1,8 billion
(2010: R1,6 billion). Trading conditions remained tough, but management rose
to the challenge aggressively. New divisional structures bedded down well.
Bidvest Automotive made a positive start, with trading profit up 73,1% at
R187,1 million (2010: R108,1 million) while revenue rose to R10,4 billion
(2010: R9,1 billion). Results were driven by strong new vehicle sales, the
efforts of more focused decentralised teams and more efficient expense
management. Profitability was assisted by R27,8 million in insurance and
financing commissions from Bidvest Financial Services.
Though new vehicle sales were robust, activity levels dipped in the second
quarter. Margin pressure was intense. The VW/Audi branches had an outstanding
six months. Smaller franchises faced pressure. Some recorded losses. Used
vehicle sales were sluggish and parts department performance flat. The service
contribution moved higher. Improved performance was seen late in the period at
Burchmores as the new online Autobid system for trade buyers proved positive.
The new management team will focus on underperforming franchises and margin
restoration as trading is expected to remain difficult.
Bidvest Electrical delivered pleasing results despite pressure on building and
construction. Revenue rose 6,4% to R2,1 billion (2010: R2,0 billion) while
trading profit moved 16,8% higher to R70,0 million (R2010: R59,9 million).
Trading challenges were compounded by copper price volatility. Margin pressure
was intense. Debtors management and expense control remained focus areas.
Repositioning and rebranding continued. Significant management effort enabled
the integration of the loss-making Solutions business into Voltex. Atlas
maintained good volumes, but margin pressure was severe. Voltex regions
delivered reasonable performances other than Eastern Cape where trading
conditions remained weak. Sanlic performance was disappointing, but Waco
returned another satisfactory result. Voltex Retail did well.
Bidvest Financial Services
Financial Services returned acceptable results in a tough low-growth market.
Bidvest Bank achieved 10,6% growth in profit before tax to R207,2 million
(2010: R187,3 million) on a strong second quarter, a weaker rand and the low
interest rate environment. Capital adequacy remained healthy at 17,4%.
Deposits grew to R1,5 billion (2010: R1,2 billion). Total assets reached R3,9
billion (R3,1 billion). Expenses were effectively managed while maintaining
marketing investment. Net cash flow from operations was R545 million. Branch
modernisation continued and four new branches were opened. Product innovation
gained momentum. Encouraging growth in corporate leasing was achieved and the
leasing business successfully diversified its leasing revenue streams.
The insurance businesses returned good results, notwithstanding an 8,1% drop
in profit before tax to R110,6 million (2010: R120,4 million). Net
underwriting profit grew 22,0% to R89,2 million (2010: R73,1 million). Policy
penetration levels remained healthy on higher new vehicle sales. Vehicle
financing returns rose on higher deal approvals and an improved bad debt
profile. Profitability was impacted by a R27,8 million commission payment to
Bidvest Automotive. The equity portfolio delivered unrealised profits of R29,1
million (2010: R41,9 million).
Bidvest Freight`s growth was driven by excellent contributions from the bulk
terminals operations. Trading profit of R439,6 million was up 10,1% (2010:
R399,4 million) while revenue rose to R10,5 billion (2010: R9,6 billion), up
9,1%.
Island View Storage returned acceptable results despite disappointing
throughput. Southern Africa Bulk Terminals had a record six months, boosted by
high maize exports. Additional external storage facility usage added to costs.
Bidfreight Port Operations experienced difficult trading on lower volumes from
key clients. Safcor Panalpina and Rennies Distribution Services were
amalgamated into a new business - Bidvest Panalpina Logistics - to give
customers broader services. SACD Frieght faced volume pressures. Bulk
Connections achieved pleasing growth. Rail service improvements were evident
and good progress made on the facilities upgrade. Lower volumes contributed to
a lower result at Naval. Manica continued to under-perform. New management
have been appointed.
Bidvest Industrial returned disappointing results. Revenue was flat at R775,3
million (2010: R773,8 million). Trading profit fell 20,9% to R49,2 million.
Challenges were evident early in the year, though some second-quarter
improvements were recorded. Afcom and Vulcan were affected by industry-wide
strikes. Price pressures remain acute and exchange rate volatility complicated
the trading challenge. Operating expenses moved higher on investment in the
World of Yamaha and Materials Handling expansion. Afcom returned poor results
as market conditions remained difficult. Berzack Brothers turnover declined as
the sewing machine division experienced a difficult period. Materials Handling
achieved pleasing turnover growth as new branch expansion progressed. Results
at Buffalo Executape were flat, but second-quarter momentum was build. Vulcan
had a much-improved first half, achieving solid sales growth. Yamaha sales
dipped and overall performance was disappointing. Management was strengthened.
Bidvest Office put in a good performance, boosted by a strong second quarter.
Revenue at R2,1 billion was 13,3% up (2010: R1,8 billion) while trading profit
rose 41,7% to R141,2 million (2010: R99,6 million). ROFE improved and expenses
were well controlled. Management was strengthened following the appointment of
a new Waltons MD and a manufacturing manager at the Cape Town furniture
factory. Strong technology sales underpinned overall performance, with a big
contribution from Global Payment Technologies. The furniture sector showed
signs of revival and Cecil Nurse optimised market opportunities. Furniture
manufacturing performed above expectations. Closer business unit collaboration
is evident. The division has built momentum, but the trading environment
remains uncertain.
Bidvest Paperplus had a pleasing first half, despite competitive markets,
rising costs and a weakening rand. Revenue rose 3,6% to R2,0 billion (R1,9
billion) while trading profit moved 7,8% higher to R186,2 million (2010:
R172,8 million). Results were lifted by a strong December. Expenses and
debtors were well managed. A new sub-divisional structure is in place and
Kolok is now well integrated into the business. Falling demand and
restructuring costs impacted Print and Conversion. Print Sales optimised
revenue and export opportunities. Labels and Packaging faced cost increases
following the creation of separate packaging production facilities. Sprint
continued to perform in line with expectation. Silverray Statmark showed
improvement and Kolok did well. Personalisation and Mail achieved good growth,
with exceptional performance at Email Connection. Afric Mail entrenched its
leadership position, with further investment into full colour digital
printing. Labels continued to improve off a low base and Lufil enjoyed good
volume growth.
Bidvest Rental and Products performed well, with revenue up 17,8% to R989,4
million (2010: R840,1 million) and trading profit 17,2% higher at R171,6
million (2010: R146,4 million). Results reflect the first contribution of
newly acquired Alsafe. Steiner returned more good results, underpinned by
stringent cost controls and good margin management. Promising new business
gains were achieved. Laundry was impacted by low revenue and rising costs.
First Garment improved market share. In Industrial Products, G Fox again
performed strongly. Phased integration of Alsafe operations is under way.
Pureau performed reasonably off low revenue growth. Execuflora did well and
secured good revenue streams. Silk by Design exceeded expectations. Synergies
with Execuflora are being explored. Hotel Amenities performed strongly while
improving expense management. Rising costs impacted Steripic. Liquipak under-
performed.
Bidvest Services was impacted by margin pressure in an intensely competitive
sector. Revenue increased by 2,9% to R1,5 billion (2010: R1,5 billion) with
trading profit flat at R94,3 million (2010: R95,0 million). Prestige performed
to expectation, maintaining margins despite rising wage and operating costs.
Margin management improved and costs were well controlled at the Security
cluster. Magnum put in a solid performance. The guarding side of the business
did well other than in the mining sector. Bidtrack recorded good results and
solid growth. Corrective action continues at TMS. CID and Vericon business
units performed well, but overall results remain disappointing. Further cost
savings will be sought. TopTurf was impacted by low contracting volumes but
the maintenance business remains resilient.
Bidvest Travel and Aviation recorded pleasing results, with revenue growing by
20,2% to R1,0 billion (2010: R852,7 million) and trading profit up 39,1% to
R146,8 million (2010: R105,5 million). Bidtravel performed exceptionally well,
reaping the benefits of recent restructuring. The business enjoyed major
tender successes and overheads were well controlled despite retrenchment
costs. myMarket was split into three - procurement, online bookings and travel
management. Bidair under-performed in the face of account losses, intense
price competition and margin pressure. Further rationalisation is planned.
Domestic cargo volumes were under intense pressure. Premier Lounges returned
improved results, buoyed by increasing passenger numbers. Budget Rent a Car
traded well as additional business absorbed excess capacity. The team did well
to secure new volume business.
Bidvest Food Division
Business conditions remained challenging, with slowing food inflation and
sluggish consumer demand. Despite this, improvements on the corresponding
period were achieved with revenue at R35,0 billion (2010: R29,2 billion) and
trading profit of R1,1 billion (2010: R956,2 million), although the weaker
rand contributed in part to this. The major contribution came from Asia
Pacific, but momentum slackened in Singapore. New Zealand exceeded
expectations. Europe was impacted by economic headwinds, though UK businesses
made good progress. European results were affected by poor performance in the
Netherlands and Czech Republic. Disappointing results were recorded in
southern Africa.
Asia Pacific
Bidvest Australia showed a modest increase in trading profit in local
currency. The business experienced a tough six months as rising unemployment
affected consumer confidence and the tourism sector was impacted by
international uncertainty. Core Foodservice businesses performed strongly in a
subdued market. Fresh and Logistics (QSR) came under pressure. Corporate sales
were particularly healthy in the Foodservice operation. Hospitality achieved
good growth with packaging and disposable products. Fresh purchased another
small fruit and vegetable distributor in Adelaide. Going forward, expense
management, labour efficiencies and innovation will receive growing attention.
Growth opportunities will be sought in fresh produce and meat. Bidvest New
Zealand achieved satisfactory results in a changeable trading environment.
Consumer confidence remained fragile and competition sharpened from direct
importers. Improved asset management was a highlight. Cash generation remained
strong. Foodservice and Fresh exceeded expectations but Logistics businesses
were challenged by falling sales. Results at Angliss Singapore were below
expectations, mainly attributable to the Local and Export operations. Seafood
achieved higher volumes and Foodservice showed a slight improvement. Angliss
Greater China achieved profitability growth in all markets.
Europe
Europe expanded its geographical footprint, with entry through a small
acquisition into Latvia, Lithuania and Estonia. Across the region as a whole,
economic growth remained low or negative. In the UK, 3663 Wholesale staged a
welcome recovery buoyed by improved volumes, particularly in free trade. The
IT upgrade is proceeding on schedule. Bidvest Logistics returned to profit on
significant contract wins. Fleet modernisation was completed. Seafood Holdings
was impacted by pressure on customer spend and lower average drop values, but
growth in net sales was achieved. Falling domestic consumption impacted Deli
XL Netherlands. Pressure in the institutional sector was severe. Hospitality
teams performed well. In Belgium, all segments performed ahead of budget but
trading conditions worsened. The Middle East businesses secured continued
growth, with pleasing sales in Saudi Arabia. In Eastern Europe, Nowaco faced
downtrading and margin pressure. Retail remained under pressure but
hospitality, restaurant and catering volumes showed reasonable growth. Farutex
outperformed, maximising opportunities in recession-free Poland.
Southern Africa
Southern Africa delivered disappointing results in a fragile market. Bidvest
Foodservice SA achieved pleasing sales growth, with solid gains in national
business. Overall performance was impacted by margin pressures and rising
costs. Credit risk increased, particularly in the restaurant channel.
Migration of branches into multi-temperature operations continued as did the
roll-out of a new ERP solution. Acquisition of the A&S food distribution
business was completed. Bidfood Ingredients increased sales, but gross margins
were affected by higher input costs, increased discounts on consumer yeast,
higher volumes in the supermarket channel and rising expenses. Continued
efficiencies are being sought through IT development. New food safety systems
are rolling out. Crown factory volumes rose. Conditions in the bakery division
remain challenging. Speciality grew first-half sales, but results were
impacted by margin pressures. Labour disruptions ahead of the annual trading
peak meant second-quarter opportunities could not be optimised. Internal
controls and debtors` management are receiving focused attention.
Bidvest Namibia
The business performed strongly, increasing revenue by 35,9% to R1,3 billion
(2010: R923,0 million) while trading profit grew 42,5% to R314,4 million
(2010: R220,6 million). Excellent results were again achieved by the fishing
division, buoyed by good catch rates and strong horse mackerel demand. All
fishing businesses recorded profits at operational level. The commercial
division showed signs of a turnaround, though Caterplus and Manica face
continuing challenges. Taeuber & Corssen SWA (Proprietary) Limited, a leading
distributor of fast moving consumer goods, was acquired for R188,7 million
with effect from December 1 2011.
Bidvest Corporate
Sale of half the economic interest in MIAL was completed in October 2011.
Bidvest Properties continued to grow its portfolio via additional
developments, such as the Waltons property in Durban, and strategic
investments. Ontime Automotive in the UK faced challenging conditions,
particularly in Rescue and Recovery. Recent contract wins will be beneficial.
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ISSUED ON BEHALF OF: THE BIDVEST GROUP LIMITED
BY: CLEAR DISTINCTION COMMUNICATIONS
BIDVEST CONTACTS: Brian Joffe (Group CE)
Tel: 011 772 8704
David Cleasby ( Group FD)
Tel : 011 772 8706
Mobile: 083 228 1810
CONSULTANCY CONTACT: Carol Dundas
Tel: 011 444 0650
Mobile: 083 447 6648
Date: 27/02/2012 07:16:01 Produced by the JSE SENS Department.
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