Bidvest profit rises in weak economic environment
Diversified group Bidvest on Monday delivered “credible results” for the year ended June 2019, in a market characterised by weak economic growth as well as significant business and fiscal uncertainty and volatility.
Revenue was largely unchanged at R77 billion, while trading profit was up 3.5% to R6.7 billion.
Bidvest’s businesses include automative, financial services, including Bidvest Bank, freight, and Bidvest Services, which remains the largest employer in the group, employing approximately 9,850 people in SA, Ireland and the UK.
The group said that exceptional cost and capital discipline as well as improved margins were highlights against the volatile trading backdrop. The combined services businesses, comprising the Services, Freight and Financial Service divisions, representing two-thirds of profit, grew trading profit by 6.4% while the profit from trading and distribution businesses contracted slightly.
Strong profitability gains were achieved at Adcock Ingram while Comair recognised the successful claim awarded against SAA, which increased Bidvest’s share of profits from these associate companies.
Earlier in August, Bidvest Group took control of pharmaceutical company Adcock Ingram after its shareholding increased to 50.1%.
In its financial services division, trading profit for the year was 7.5% down at R584.5 million.
“Bidvest Bank had a reasonable year despite no contribution from any new large fleet full maintenance lease contracts and certain large contracts are in run-down,” the group said.
Vehicle deliveries in terms of the new Transnet heavy commercial vehicle contract only commenced in the new financial year. Deposits were 15.4% higher with the fledgling business and personal banking offering showing ‘pleasing signs of growth’.
The investment portfolios ended the year significantly down in the context of a poor JSE market performance, Bidvest noted.
“Bidvest Insurance had a disappointing year and has realigned its offering. The fast-growing life insurance activities continue to cause new business strain,” it said.
Reporting highlights
- Trading profit up 3.5% to R6.7 billion
- Headline earnings increased to R4.6 billion
- HEPS increased by 9.8% to 1 352.1 cents
- Normalised HEPS increased by 5.2%
- R7.1 billion cash generated from operations
- R5 billion spend on acquisitions and capex
- Final dividend declared of 318 cents per share, up 5.6%
Bidvest said that South Africa needs real GDP growth in order to create employment and prosperity for all. This is both the public and private sectors’ responsibility.
“Government’s ability to credibly address the precarious financial position of several SOEs, initiation of development programmes and ongoing maintenance in key entities and facilities remains critical to kick-start the South African economy.
“Private sector needs to invest to establish and grow productive and efficient businesses and industries,” it said.
Bidvest said it will continue to strategically invest to generate sustainable profits for the long term, “while remaining cognisant of suitable timing for embarking on large scale investments”.
“Sufficient headroom exists to continue the Group’s strategy of growth in its existing markets, as well as continuing to acquire divisional bolt-on businesses, and to pursue larger, value adding opportunities locally.
“Internationally, we target expansion in the chosen niche areas of services and commercial products,” it said.
Read: Bidvest Bank launches new account in retail banking push
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