Wrap Text
Capital Markets Update
Bid Corporation Limited
(Incorporated in the Republic of South Africa)
Registration number: 1995/008615/06
Share code: BID
ISIN: ZAE000216537
("Bidcorp" or "group" or the "company")
CAPITAL MARKETS UPDATE
Shareholders are advised that today, Wednesday, November 12th 2025, Bidcorp's
management wish to update the market on the trading environment across its global
operations, for the 4-month period to October 2025. This is in accordance with the
group's obligation for continuous disclosure in terms of the JSE Listings Requirements.
Trading performance for the 4 months to October 2025
Our F2026 year-to-date (YTD) results to the end of October 2025 reflect continuing
positive momentum post our F2025 performance, with trading profit growth of 8,6%
(6,8% in constant currency) off revenue growth of 8,0% (6,4% in constant currency). This
is pleasing considering the ongoing lacklustre trading conditions generally being
experienced around the world, where margins remain under competitive pressure, and
the cost base continues to face upward pressure, particularly in wage costs. Food
inflation across our product basket has started to increase, fortunately at manageable
levels. August trading was a bit slower than trend; however, we have seen a sequential
improvement through October and even early November as we head into the important
festive season.
Headline Earnings Per Share (HEPS) YTD to October 2025 has shown growth of 7,2%
(5,1% in constant currency), impacted by higher funding costs and a slightly elevated
estimated tax rate. Currency volatility has benefited our rand-translated results, with YTD
forex movements having a 2,1% positive impact on the group's rand-translated numbers.
Overall market conditions
Consumer spending generally remains subdued primarily due to the ongoing cost-of-
living pressures but also heightened by uncertainty arising from the ongoing tariff turmoil
(which continues to have little direct impact on our business). The slightly reduced
interest rate environment appears to have had little positive impact in most markets with
no noticeable improvement in consumer sentiment or spending evident.
The operating environment remains challenging; core inflation continues to be sticky and
remains higher than food inflation in most parts of the world. Labour costs remain
elevated driven by wage increases which generally outstrip core inflation levels. Labour
availability in essential driver and warehouse operative categories remains tight,
impacted by low unemployment levels in many countries. Global shipping dislocations
and the resultant higher supply chain costs remain.
Market competition is always heightened in tougher economic conditions, where
competitors, who maybe don't have similar return expectations as us, are aggressively
chasing volumes at any cost. Our focus remains on being competitive and growing
market share, sometimes sacrificing margin to increase volumes despite the short-term
impact on profitability. Our customer base appears resilient in tighter economic
conditions, and we are managing and monitoring the increased credit risk in all
jurisdictions accordingly.
Despite the challenging broader economic environment, our teams continue to
demonstrate focus, flexibility, and adaptability, consistently delivering high service levels
and maintaining relevance within their target markets, and generally achieving
acceptable growth.
Divisional trading performance to October 2025
• Australasia (AUS) – Australia's trading profit was slightly up in the period, off
reasonable sales growth of around 5%, which did not fully translate to profit
growth primarily because of margin pressure and the strategic decision to retain
and grow volumes. Fortunately, this trend started reversing in October and
margins are moving upwards again, in a very price-sensitive environment.
Recently momentum has shifted to the positive. New Zealand continues to
operate in an extremely challenging macro-economic environment with the
hospitality market still under significant pressure. Revenues have held up but
margins have been sacrificed to sustain customer volumes. Costs have been well
managed despite the investment in new infrastructure. October trading reflected
an improved comparative result which indicates the worst may well be behind the
business, despite a slow anticipated recovery. Both the Australian and New
Zealand businesses continue to pursue their manufacturing and import activities.
• Europe (EUR) - Sales have held up well YTD, increasing around 9% in constant
currencies, maintaining their positive trajectory. Good trading performances have
been achieved by the Netherlands, Belgium, Czech & Slovakia, Poland, Baltics,
Portugal, and Italy. Italy delivered a significant increase in profitability as they
reap the benefits of their investment into new infrastructure and the two recent
bolt-on acquisitions. Spain delivered good top-line growth, but profitability was
impacted by the increased costs of new capacity in both Barcelona and San
Sebastien.
• United Kingdom (UK) - Sales have grown at nearly 5% in constant currency,
gross margins have improved, and despite increased costs (onboarding new
contracts and new depot preparations), trading profit growth of more than 8%
was achieved. Trading and economic conditions remain challenging. Economic
uncertainty persists with businesses and consumers alike still struggling to deal
with the impact of the National Insurance and minimum-wage hike that was
implemented towards the end of last financial year. There is also an expectation
of further tax increases in the upcoming budget. Core inflation is still high and
food prices are rising. The independent hospitality sector (served by the CFBG
and Fresh businesses) has been hit particularly hard, fortunately our Bidfood
business is relatively strong in the non-discretionary market (education,
healthcare, aged care, defence, and government). On a positive note, Bidfood
started successfully trading with a large new customer late in September, having
incurred all associated startup costs prior to onboarding. Bidfresh concluded an
acquisition early in the period which will deliver volume, profit, and a strategic
advantage in the fresh marketplace. A new greenfield Bidfood facility in
Worcester recently had a soft opening, adding to the wholesale business' first-
class infrastructure and positioning the operations for further volume and profit
growth.
• Emerging Markets (EM) - Our EM region has delivered reasonable YTD sales
and trading profit growth of 7% in constant currencies. South Africa continues to
perform very well, in particular the Bidfood business, against a backdrop of
anemic economic growth. The sentiment in South Africa remains positive, but
lower interest rates and structural reforms haven't yet translated into real
outcomes. In Greater China weak consumer spending and low tourism continues
to impact Angliss. Management is doing a great job of keeping the business
steady, but the sales and margin declines have been greater than the cost-saving
initiatives. Singapore has started to make-up lost ground, with the monthly
profitability run-rate now positive, post two-years of rationalisation and
repositioning. Malaysia continues to perform well, benefiting from a recent
acquisition of an ambient grocery distributor and their infrastructure investment
in Kuala Lumpur is well underway.
In South America, Chile is flat and receiving focused management attention.
Brazil is much improved and looking for suitable acquisition opportunities.
Argentina continues to contend with a very volatile market. The Middle East is
satisfactory with the UAE's good performance being negated somewhat by
growing pains in Saudi. Türkiye is challenging but improving as we scale
organically into our national infrastructure in a volatile and high inflationary
environment.
Group financial performance to October 2025
Our revenue growth to the end of October 2025 continues to outperform the record high
of the comparative prior year by 6,4% in constant currencies (8,0% in rands).
Acquisitions only contributed 1,4% to net revenue, and estimated product inflation of
around 2,0%, resulting in like-for-like real organic growth of almost 4,0%, a very solid
achievement for the real world in which we operate.
Group's gross profit percentage has softened slightly, reflecting the strategic decision
some of our businesses made to deliberately sacrifice some gross margin to maintain
volumes. Pleasingly, the UK margin continues to show improvement. Our operating costs
as a percentage of net revenue ("cost-of-doing-business") has declined despite labour-
cost pressures. The slight decline in gross margins has been mitigated by the lower cost-
of-doing-business experienced in the period, a very commendable and pleasing
outcome.
For the period to October 2025, the group's EBITDA margin (before IFRS 16) of 6,1%
slightly outperformed the F2025 comparative.
The estimated clean tax rate (excluding capital items and associates) is in line with
previous guidance of between 26% and 27%, albeit at the top end of the range and
higher than F2025.
Bidcorp typically absorbs working capital in the first half of the financial year and
generates into the second half. Average working capital days for Q1 F2026 are similar
to Q1 F2025 at around 11 days. Working capital continues to be very tightly managed.
Lower net capital investments (including acquisitions) to September 2025 of R2,6 billion
(Q1 F2025: R3,5 billion) are driven by smaller acquisitions and slightly lower capital
investment spend. These investments come at a cost to short-term performance
(impacting results in the UK, Spain, and New Zealand) but remains the correct long-term
decision to ensure the sustainability and growth trajectory of our operations. The group's
medium-term target for capital investments of 1,5% - 2,0% of revenue remain.
As noted in August, four small bolt-on acquisitions, collectively costing R1,1 billion, have
been concluded to date, in the UK, Italy, South Africa, and Malaysia.
Free cash outflow in Q1 F2026 is pleasingly significantly lower than that of the
comparative quarter, assisted by better operational cash flow generation, lower
absorption of working capital (R1,5 billion lower), and reduced investment activities, as
noted above and this trend is expected to continue.
Liquidity and debt covenants
There are no loan maturities required through the balance of F2026. The group and
subsidiaries have, at the end of October 2025, total headroom available of R22,3 billion
(£962 million). The group remains significantly well within its debt covenants.
Focus and opportunities
We are pleased with the robust YTD performance of the group, especially considering
the economically flat and uninspiring markets in which we operate. The extraordinary
people of Bidcorp operating within our decentralised model enable the group to actively
navigate the varying shifts in local market dynamics.
We are continually refining our customer portfolio, expanding our reach to remain close
to our customer base, while investing in additional capacity to meet future growth. Our
portfolio of businesses, each at different stages of growth and size, continue to develop
along our foodservice maturity continuum, presenting significant opportunities in the
coming years. Developing our capabilities in Own Brand, imports, and light value-add
manufacturing, will sustain and enhance our margins to deliver market-leading returns
to our stakeholders. Simplicity, tight asset and cash management, and technological
advancements to enhance our offering remain core to our strategic focus.
Bolt-on acquisition opportunities continue to be pursued; however, we remain disciplined
and patient in converting the right opportunities at the right price. Several potential
acquisitions have been rejected recently as these businesses appear to have passed
peak profitability and are showing declining performance in these challenging times. Our
management are focused on successfully integrating recent acquisitions to realise their
growth potential and relevant synergistic benefits. Our appetite for the larger
opportunities remains, although no such opportunities have presented themselves. Our
capital structure provides significant financial firepower to pursue the right opportunities.
Our outlook remains positive for the balance of F2026, despite the ever-present macro
uncertainties, and we are confident that we will continue to deliver real growth.
Comment
Bernard Berson, CEO, commented as follows:
"I am immensely grateful for our exceptional team and believe that their continued
dedication, coupled with our unwavering focus on the right culture and principles,
positions us for continued growth and prosperity."
_____________________________________________________________________
The information contained in this announcement has not been reviewed or reported on
by the group's external auditors.
_____________________________________________________________________
Date: November 12th 2025
Johannesburg
Sponsor: The Standard Bank of South Africa Limited
Date: 12-11-2025 09:00:00
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