Bidvest Group’s diversified industrial service, trading and distribution businesses generated a solid performance in the year to June 30 and there were indications that market conditions in all the territories where it operates should start improving, CEO Mpumi Madisa said yesterday.
Five of its seven divisions reported profit growth, four of those with double-digit profit increases, she said in an interview. The formation of a Government of National Unity was one indicator of a more business-friendly environment in South Africa, she added.
The final dividend was raised 25% to 447 cents a share, bringing the total for the year higher by 4.3% to 914 cents. Group revenue increased 6.5% to R122.6 billion, while normalised headline earnings a share increased by 4.3% to 1964.8 cents.
Bidvest has come out of a busy year with 11 acquisitions in the UK, Ireland, Australia, Singapore and the US. Three more had been approved by the Competition Commission post year-end and there were “one or two more” in the pipeline, but the pace of acquisition activity was likely to slow, she said.
Of the group’s 19% increase in trading profit from overseas operations, 8% was organic and 11% by acquisition. Some 22% of group trading profit was derived from the overseas businesses.
One division that did not perform well last year was automotive, but Madisa said she anticipated a better result in the new financial year.
Automotive sales fell 8%, more than the 6% reported for the industry, due to McCarthy’s brand mix being misaligned to current demand trends. However, dealer points for Mahindra, FAW, JeTour, GAC and LDV were now operational in shared dealer spaces, in line with greater volumes of India- and China-manufactured models being sold.
In addition, the automotive short-term insurance business was transferred from the Financial Services division to the automobile segment.
These factors, and the strategy to diversify into allied automotive services through, for example, the acquisition of vehicle-testing business Dekra, would also help reduce the cyclicality of the automotive business, Additionally, 2024 was expected to represent a trough in new vehicle sales volumes in South Africa, she said.
Meanwhile, the Bidvest Bank and FinGlobal disposal process was under way, and management aimed to identify acquirers by end of the 2024 calendar year, a process that would complete the alignment of group businesses in the industrial space.
One of the likely impacts on results in the new financial year was the likelihood of transporting zero maize, which Madisa said was the result of a 6–7-year cyclical trend in the global maize market that saw South Africa producing enough for its own requirements and global markets producing enough so that South Africa did not need to export.
“Reforms in the electricity and logistics sectors are critical to unlock structurally higher and inclusive economic growth in our home base,” she said. While Eskom’s performance had exceeded all forecasts, additional interventions were required on the logistics front than what was being implemented in the Freight Logistics Roadmap.
In the UK and Europe there were early signs of a more positive macro environment.
The travel and tourism industry was buoyant with a strong forward order book.
The envisaged integrated operations in Australia were expected to deliver synergies, both revenue and costs.
The butane spheres at Bidvest Tank Terminals were commissioned, and the multipurpose tanks were fully operational soon after year end.
Buoyant oil and gas activity as well as higher dry bulk volumes imported and exported manifested in a phenomenal result out of Namibia. Volumes were growing because more vessels were calling at Namibia’s ports due to inefficiencies at South African ports, she said
International clearing and forwarding operations benefited from new business wins and the consolidation of the warehousing and road freight business units yielded good synergies.
Additional multipurpose tank capacity was commissioned in August and the building of additional fuel tanks should be complete towards the end of the financial year.
BUSINESS REPORT