Wrap Text
Voluntary Trading Update: Four months to October 2018
THE BIDVEST GROUP LIMITED
(“Bidvest” or “The Group”)
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
JSE Share code: BVT
ISIN: ZAE000117321
VOLUNTARY TRADING UPDATE: Four months to October 2018
At Bidvest’s Annual General Meeting (AGM) held today, 28 November 2018, the Group provided an update on
its performance for the first four months, ended 30 October 2018, of the financial year (FY19).
The operating performance, year to date, has been solid notwithstanding sluggish economic growth, political
instability and waning business confidence in South Africa. Almost all divisions achieved trading result growth,
with a strong focus remaining on cash generation and ensuring an acceptable shareholder return.
Bidvest Chief Executive, Lindsay Ralphs, commented, “We are pleased with our year to date performance, and
we remain confident that our resilient business model, tight expense control, the measures we have taken to
ensure we remain relevant and competitive, as well as increased volumes in certain sectors and acquisitions,
will enable us to deliver acceptable growth in FY19. Our sound financial position and strong balance sheet
provides adequate headroom to support our growth and investment aspirations, both locally and
internationally.”
The trading operations delivered an acceptable trading result, which was assisted by the acquisition of Noonan
(effective September 2017). Given the broad reach of our activities, Bidvest has benefitted from the
continuation of good agricultural volumes, the investment and capacity increase in liquid storage tanks,
growing demand for branded everyday essential consumer products as well as the annuity-type nature of
many of its operations. Businesses exposed to the infrastructure, construction and manufacturing sectors
witnessed further contraction in demand.
Several small bolt-on acquisitions have been concluded since year end, with a few larger bolt-on transactions
being finalised. Management continue to evaluate acquisition opportunities, both locally and internationally.
Progress on Bidvest Freight’s ZAR1 billion Liquified Petroleum Gas (LPG) project is on schedule and civil work is
progressing well. A sod-turning ceremony, with key local stakeholders, was held in September 2018. The
commissioning of the last six multi-purpose tanks in Richards Bay will be complete by the end of 2018.
The strategic assessment with regards to Bidvest’s non-core assets continues. Post year-end, Bidvest sold its
remaining Bidcorp shares at R320 per share, for a total sum of R407mn. In Namibia, proceeds have been
received from the Bidfish disposal and for most of the Angolan assets.
Asset management remains a core focus. Management of debtors remain critical in these challenging times
and management regards the current profile as acceptable. Strategically, inventory was increased in certain
businesses. In line with historic seasonal patterns and considering the strain in the local economy, the Group
expects working capital absorption at the end of the interim period. Net debt /EBITDA remains healthy,
despite continued corporate action and capital investments in South Africa.
In November, Bidvest successfully raised three long-term bonds, totalling R1.3 billion, in a significantly
oversubscribed process. This extended the term of Group debt after the cumulative redeemable preference
shares, to the value of R1.0 billion, were settled early.
Group ROFE improved year on year.
Additional operational commentary:
Services
Services returned a credible result in a challenging and price sensitive market, boosted by the additional two-
month contribution from Noonan. In SA, the results reflect the largely, annuity nature of the operations. The
high fuel costs are a challenge across the division. Contract churn was slightly elevated and margin pressure
remains a feature, while customised solutions continue to gain traction culminating in new contracts. Bidvest
Facilities Management and BidAir performed strongly and management’s interventions in Travel are starting to
yield benefit. Noonan exceeded expectations. Management continues to pursue potential acquisitions, both
locally and internationally.
Freight
The benefit from investment in multipurpose liquid tanks, continuation of good agricultural volumes and
strong fertilizer volumes, more than offset lower chemical and edible fats and oils volumes and continued
sluggish discretionary consumer product imports. Bidvest Panalpina benefitted from new contract growth.
Berth capacity remains constrained in Bulk Connections and is only expected to be resolved towards the end of
Q3FY19. The UK operations, OnTime and the Mansfields Group, which are included in this division from 1 July
2018, showed steady improvement. Overall, the result to date has been satisfactory.
Commercial Products
A strong performance from the consumer-related businesses was largely neutralised by the weak trading
environment experienced by the industrial focused businesses. The overall trading margin was somewhat
affected by pricing pressure and a change in business mix. Home of Living Brands, Academy Brushware and
Interbrand produced good results. Depressed industrial and manufacturing activity, delayed contract work and
pricing pressures all contributed to a less robust start to the financial year.
Office & Print
The overall performance has been good despite constrained revenue and the closure of Zonke in December
2017. Konica Minolta, Kolok and Silveray reported strong results on the back of improved margins while Data,
Print and Packaging delivered solid results. Furniture had a slow start. Waltons is preparing for the important
back-to-school period. Asset management and rightsizing of businesses continue to be key focus areas.
Financial Services
Pleasingly, Bidvest Bank has secured new fleet contracts, including the Transnet heavy commercial vehicle
business. This contract will be delivered during the course of 2019. Business banking activities reported
improved results and new customer growth in various areas was encouraging. The remainder of the division
traded well, considering the negative business drag from the fast-growing life insurance activities. The
insurance investment portfolios are coupled with local and international equity and bond markets, and
material negative mark-to-market adjustments were recognised given recent market volatility.
Automotive
The automotive retail operations are holding their own while Bidvest Car Rental reported an improved
performance. Luxury vehicle sales remained weak but overall margins were slightly better on new vehicle
sales. Used vehicle volumes were subdued and aftermarket margins remained under pressure. Car rental
volumes grew and fleet utilisation improved. Expense management and efficiency gains are key focus areas,
across the division.
Electrical
The continued lack of infrastructure investment and virtual collapse of the building and construction industries
made for very difficult trading conditions. Trading operations were focused on retaining market share, but this
came at the expense of gross margin. Several of the speciality businesses secured good orders. Project work
remains scarce and timing uncertain. Efficient expense management and modernisation efforts alleviated
some of the margin pressure. Working capital management remains a key focus area.
Conclusion
Bidvest intends issuing its results for the six-months ending 31 December 2018 on Monday, 4 March 2019.
Shareholders are advised that the financial information relating to the 2019 financial year has not been
audited, reviewed or reported on by the Group’s auditors and that this update does not constitute a forecast.
Date: 28 November 2018
Johannesburg
Sponsor: Investec Bank Limited
Date: 28/11/2018 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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