INDUSTRIAL conglomerate Bidvest on Monday moved to allay concerns about the company’s prospects following the unbundling of its food services business — the biggest driver of turnover and profits.
Bidvest Foodservice — which has operations in Australasia, the UK, Europe and various emerging markets — was responsible for 60% of the group’s R1.14bn turnover in the six months to December and 45% of trading profit. Earnings were flattered by the weak rand, which weakened against all the major currencies in which the group’s foreign operations trade.
But Bidvest CEO Brian Joffe, who plans to step down following the unbundling, was adamant Bidvest Industrial, whose assets are mainly based in Southern Africa, still had huge potential to grow as a standalone unit. "Bidvest without the food business will still be the largest industrial business in SA by multiples," he said at the company’s results presentation on Monday.
Turnover of Bidvest Industrial — which hold its streamlined automotive, electrical, financial services, freight, commercial, services, and office and print assets — expected to reach R100bn by the end of the year from last year’s R93bn, said incoming CEO of the division, Lindsay Ralphs. "We are pursing decent-sized acquisitions for the commercial division," said Mr Ralphs of the new streamline unit that houses the company’s former industrial and consumer products brands.
He hinted the acquisitions would mostly likely be offshore and outside the African continent, in line with the strategy to "aggressively grow the international base".
SA, which makes the second-biggest contribution to the group’s turnover after food services, increased interim profits, despite slow economic growth and the protracted drought, which hit maize exports. The company said it expected the 5.5-million tonnes of maize SA would have to import to boost its freight services in the six months.
In Namibia, Bidvest recorded a 30.1% decline in trading profit to R120.9m due to challenges with negotiating fishing quotas.
The group downscaled its fishing business and sold off some vessels in a bid to contain costs. Mr Joffe said negotiations with the government about the quotas were under way.
"The new prime minister seems to be receptive," he said.
The listing of the food services business on the JSE on Monday comes 15 months after the company ditched its original plan to list it in London due to difficulties overcoming regulatory hurdles.
Nick Webster from HSBC questioned the change in direction and asked if the company had abandoned its foreign listing entirely.
"We have not abandoned the foreign listing," Mr Joffe said. "This is just the first step … in a complex process," he said.
Ron Kliplin, analyst at Cratos Wealth, backed the company’s plans to unbundle the food services assets, praising management’s expertise in containing costs and executing operational efficiencies.
"They are good operators (with) a consistent record of delivering even in the most difficult circumstances," he said.
Bidvest paid an interim divided of 482c, a 13.1% increase from the previous comparable period.
The stock closed down 0.97% at R357.29 on Monday, paring gains since January to 7.82%.
Brian Joffe. Picture: MARTIN RHODES
INDUSTRIAL conglomerate Bidvest on Monday moved to allay concerns about the company’s prospects following the unbundling of its food services business — the biggest driver of turnover and profits.
Bidvest Foodservice — which has operations in Australasia, the UK, Europe and various emerging markets — was responsible for 60% of the group’s R1.14bn turnover in the six months to December and 45% of trading profit. Earnings were flattered by the weak rand, which weakened against all the major currencies in which the group’s foreign operations trade.
But Bidvest CEO Brian Joffe, who plans to step down following the unbundling, was adamant Bidvest Industrial, whose assets are mainly based in Southern Africa, still had huge potential to grow as a standalone unit. "Bidvest without the food business will still be the largest industrial business in SA by multiples," he said at the company’s results presentation on Monday.
Turnover of Bidvest Industrial — which hold its streamlined automotive, electrical, financial services, freight, commercial, services, and office and print assets — expected to reach R100bn by the end of the year from last year’s R93bn, said incoming CEO of the division, Lindsay Ralphs. "We are pursing decent-sized acquisitions for the commercial division," said Mr Ralphs of the new streamline unit that houses the company’s former industrial and consumer products brands.
He hinted the acquisitions would mostly likely be offshore and outside the African continent, in line with the strategy to "aggressively grow the international base".
SA, which makes the second-biggest contribution to the group’s turnover after food services, increased interim profits, despite slow economic growth and the protracted drought, which hit maize exports. The company said it expected the 5.5-million tonnes of maize SA would have to import to boost its freight services in the six months.
In Namibia, Bidvest recorded a 30.1% decline in trading profit to R120.9m due to challenges with negotiating fishing quotas.
The group downscaled its fishing business and sold off some vessels in a bid to contain costs. Mr Joffe said negotiations with the government about the quotas were under way.
"The new prime minister seems to be receptive," he said.
The listing of the food services business on the JSE on Monday comes 15 months after the company ditched its original plan to list it in London due to difficulties overcoming regulatory hurdles.
Nick Webster from HSBC questioned the change in direction and asked if the company had abandoned its foreign listing entirely.
"We have not abandoned the foreign listing," Mr Joffe said. "This is just the first step … in a complex process," he said.
Ron Kliplin, analyst at Cratos Wealth, backed the company’s plans to unbundle the food services assets, praising management’s expertise in containing costs and executing operational efficiencies.
"They are good operators (with) a consistent record of delivering even in the most difficult circumstances," he said.
Bidvest paid an interim divided of 482c, a 13.1% increase from the previous comparable period.
The stock closed down 0.97% at R357.29 on Monday, paring gains since January to 7.82%.
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