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Bidvest - Bidvest posts solid results lifting headline earnings by 29%
The Bidvest Group Limited
Registration Number 1946/021180/06
ISIN ZAE000050449 Share Code BVT
("Bidvest" or "the Group" or "the Company")
Press Announcement
BIDVEST POSTS SOLID RESULTS LIFTING HEADLINE EARNINGS BY 29%
HIGHLIGHTS
- Revenue up 41,6% to R31,5 billion
- Trading income up 30,9% to R1,48 billion
- Headline earnings per share increased by 29,1% to 319,5 cents
- International Foodservice grows trading income 15% in Sterling
- Distribution per share increased by 18,0% to 133,8 cents
BIDVEST reported a satisfactory 29,1% increase in headline earnings per share to
319,5 cents for the 6 months to December 31 2004.
Revenue grew 41,6% to R31,5 billion, boosted by the inclusion of McCarthy
Limited in the interim results for the first time. Trading income was up 30,9%
to R1,48 billion, but margins dropped from 5,1% to 4,7%, due primarily to the
contribution from the lower margin McCarthy Motor business.
Cash generation from the underlying businesses remained robust, though there was
a net utilisation of funds due to seasonal working capital requirements,
increased capital expenditure and strategic acquisitions.
The Group"s balance sheet remains healthy with the interest cover at 11,2 times.
Net gearing increased to 36%.
Bidvest CE Brian Joffe commented "The results are pleasing in light of the
difficult trading conditions in several of the group"s markets. We are conscious
of the need to remain focussed in view of deflationary pressures and the
continued strength in the Rand. Noteworthy performers among the group"s various
divisions were Bidserv, McCarthy"s, Combined Foods and International Food
Services. Bid Industrial Products, the newly constituted grouping within The
Commercial Products Division, also posted good results".
ACQUISITION
Bidvest announced on January 21 2005 that it had acquired approximately 17% of
Tiger Wheels Limited, with an option to go to 20%. The motivation for the
acquisition is to expand the group"s exposure to automotive products. Tiger
Wheels has four manufacturing plants in the US, Germany, Poland and Babelegi, as
well as retail outlets and the distribution rights for Yokohama tyres in South
Africa.
DISTRIBUTION
The distribution to shareholders out of share premium, in lieu of a dividend,
increased 18,0% to 133,8 cents a share (2003: 113,4 cents a share).
DIVISIONAL OVERVIEW
THE SERVICES DIVISION
This division comprises Bidfreight, Bidcorp, Bidserv and Renfin.
Bidfreight southern Africa turned in a commendable performance against a
background of rand strength, which negatively impacted export volumes. Trading
income grew by 6,6% to R222,8 million, achieved on a 6,9% increase in revenue to
R6,6 billion. The Terminals business posted a good result in these difficult
market conditions, where lower coal and steel exports were partially offset by
strong imports of agricultural products and containerised cargos. Both Safcor
Panalpina and Marine delivered improved operational results despite the rand"s
appreciation against the dollar and lower interest rates.
Bidcorp, the UK-based business providing services to the automotive, shipping
and property sectors, reversed the trading loss reported a year ago delivering
trading income of R5,4 million. The Shipping business and most of the Automotive
operations showed improved results but the Volume Transport businesses continue
to be impacted by tough trading conditions.
Bidserv, which provides "soft services" such as cleaning, security and laundry
within the facilities management and corporate sector, turned in an excellent
performance, boosted by the contribution from strategic acquisitions. Revenue
grew 49,2% to R1,39 billion and trading income increased 48,8% to R131,7
million. Demand for cleaning services continues to grow, while the Hygiene and
Laundry businesses made good headway. The newly-formed security division is
performing to expectations, while both the Aviation and Greens businesses posted
solid trading results.
Renfin"s revenue was 6,8% higher at R337,8 million however, trading income
decreased by 9,0% to R66,0 million.
The Group"s Travel operations had a difficult year, reflected in a 25,0% decline
in trading income. While the strong rand is discouraging tourist travel into
South Africa, it has not had the expected effect of stimulating outbound
corporate travel and the Group"s travel operations saw a continuation of the
flat trends noted in the prior year. The introduction of zero commission from 1
May this year is a very welcome development and one for which the Travel
division is well prepared. Travel"s conversion to a fee based remuneration
model is progressing according to plan in all the travel companies.
Rennies Bank delivered an improved performance following the implementation of
cost reduction initiatives during the previous year. Dealing profits were
impacted by the stronger exchange rate and reduced volatility of the rand across
the main basket of trading currencies.
THE FOODSERVICE PRODUCTS DIVISION
This division focuses on the supply and distribution of foodservice products and
comprises Bidvest United Kingdom (3663), Bidvest Australasia, Caterplus and
Combined Foods.
3663 reported a 14,3% increase in trading income in Sterling. This represents a
good achievement in a difficult and competitive market, aggravated by poor
summer weather. All divisions performed better against the prior year both in
terms of sales and trading income. Multi-temp"s revenue growth offset higher
costs of distribution and accommodation resulting from the depot refurbishment
programme. Cost savings remain an area of focus for the Frozen division.
Central Distribution improved its trading performance, achieving efficiency
gains in distribution. The fresh/chilled product extensions through Swithenbank
and Bartons Meat continue to make progress.
Bidvest Australasia grew trading income by 21,6% in Australian dollars, with a
particularly strong performance from Crean (New Zealand) where trading income
increased 68% in local currency. This follows the roll-out of a national
distribution network and a concomitant growth in market share. Australia
continues to consolidate its position as the country"s leading foodservice
products distributor. Notwithstanding the improved operational performance, the
two largest markets - Sydney and Melbourne - continue to underperform, despite
an improved performance from Melbourne. New growth opportunities are being
sought in the fresh/chilled and contract logistics markets in New Zealand.
Caterplus increased revenue by 11,0% to R1,1 billion and trading income by 11,1%
to R101,3 million. The results from Catering Supplies were marginally down on
the prior period, impacted by deflationary pressures on key product lines,
reduced tourist numbers and intensified competition. The Frozen business
succeeded in gaining market share and pursuing strategic supplier alliances,
while Vulcan performed well, growing trading income by 58% due to increased
demand for exports. Several strategic acquisitions made during the period
broadened the product offering and made a positive contribution to the
division"s financial results.
Combined Foods had another good set of results, lifted by improvements in both
volumes and trading income. Revenue increased by 12,0% to R556,4 million and
trading income grew by 20,9% to R70,2 million. Crown National achieved higher
domestic sales and the higher demand for own ingredients increased production
volumes.
Bakery Supplies achieved volume growth and market share gains in a highly
competitive market characterised by price deflation of up to 7% on certain
product lines. Baking Products maintained overall volumes, and the
rationalisation of the distribution channels continues to deliver savings and
efficiencies.
THE COMMERCIAL PRODUCTS DIVISION
This division, as a first stage, has been reorganised to better align management
expertise and operational skills, while at the same time presenting a clearer
customer focus. The new groupings are: Bidoffice - Office Products (Stationery,
Furniture and Automation), Bidoffice - Printing and Paper Conversion (Lithotech,
Statmark and Silveray) and Bid Industrial Products (Voltex and Afcom / Buffalo
Executape).
Office Product"s revenue increased by 7,2% to R1,7 billion and trading income
was 2,8% lower at R116,4 million.
Joffe commented it was another challenging period for Office Products, with the
strong rand again exerting pressure on prices and margins, particularly in
stationery where competitors dropped prices to maintain market share. Furniture
reported a much improved performance.
Waltons" trading income declined despite unit volume growth. Kolok has produced
acceptable results, and an expansion of its product range will benefit the
business going forward.
Office Automation benefited from favourable trading conditions with trading
income 25,0% up on the prior period. A number of large deals have been recently
secured which bodes well for the second half of the financial year.
Printing and Paper Conversion"s revenue was 3,0% down at R0,97 billion and
trading income down 19,1% to R79,9 million, a consequence of deflationary
pressures which were largely offset by volume increases and market share growth.
Lithotech SA continues to move up the value chain and away from more mature
products where demand is waning. This necessitated investment in new machinery
and product lines. Lithotech France delivered another poor performance due to
margin pressure and capacity constraints in its long run production lines.
Further rationalisation will be implemented to improve the ongoing operational
performance.
Silveray managed to increase volumes and market share in a difficult and
deflationary market.
Bid Industrial Products increased revenue 12,1% to R1,49 billion whilst trading
income increased 25,0% to R97,6 million.
Voltex continues to deepen its market penetration, and its investment in skills
contributed to the overall improvement in margins, resulting in trading income
growing 35,8%. Afcom GE Hudson and Buffalo Executape both enjoyed good trading
periods, though continued rand strength will require a relentless focus on
costs.
THE AUTOMOTIVE PRODUCTS DIVISION
McCarthy generated revenue of R6,9 billion and trading income of R238,4 million.
While South African new vehicle sales are at record levels, competition is
intense and hence margins are under pressure. Used vehicle sales were lower than
expected, though this market appears to have bottomed and should improve in the
current period. Several new and pre-owned dealerships were opened and more are
in the pipeline. McCarthy"s financial services businesses had another excellent
trading period. Budget Rent A Cars fleet utilisation achieved record levels,
resulting in a much improved performance. Yamaha distributors benefited from
strong consumer demand. Joffe noted international interest in South Africa as an
automotive market, have opened up some exciting opportunities for McCarthy.
Corporate Services comprises the effective 31% owned Namsov, the Namibian
fishing business, Bidvest Network Solutions and online market mymarket.com,
which continues to grow its customer base with business transactions topping an
annualised R1,2 billion. Namsov reported poor results due to catch sizes, fuel
increases and the strength of the Namibian currency against the US dollar.
PROSPECTS
Joffe says the primary focus for the remainder of the financial year will be to
seek out organic and acquisitive growth opportunities while ensuring the Group
manages its cost base in an environment of low inflation and deflationary
pressures. Asset Management and cash flow within the Group will show a marked
improvement in the second half of the financial year. Underperforming businesses
not generating acceptable returns will be subject to intense focus, and if
necessary, asset realisations.
He says management is confident of achieving real growth in earnings in the
second half of the financial year against the comparative period which included
the acquisitions of McCarthy Limited and the minority interests of Bidvest plc.
ISSUED ON BEHALF OF: THE BIDVEST GROUP LIMITED
BY: CLEAR DISTINCTION COMMUNICATIONS
BIDVEST CONTACTS: Brian Joffe (CE)
Tel: (011) 772-8704
David Cleasby (Investor Relations)
Tel : (011) 772-8706
Mobile: 083 228 1810
CONSULTANCY CONTACT: Carol Dundas
Tel: (011) 444-0650
Mobile: 083 447-6648
Date: 28/02/2005 07:02:20 AM Supplied by www.sharenet.co.za
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