Companies
Bidvest faces pressure but reports revenue growth in half-year results
The Bidvest Group has set aside R400 million towards employee relief initiatives as a result of the coronavirus (Covid-19) pandemic. Leon Nicholas / Independent Newspapers. Published Mar 4, 2025 | Published Mar 4, 2025. Share
Bidvest raised revenues by 6% to R64.5 billion in the six months to December although interim normalised headline earnings per share were nearly flat at 1057.7 cents. CEO Mpumi Madisa and chief finance director Mark Steyn on Monday described the operating environment as tight and challenging for the financial service group.
Despite the revenue increase for the half-year, trading profits in Bidvest flatlined at R6.3bn after the trading profit margin for the season fell by 66 basis points despite cash generated from operations firming up by 18% to R4.5bn. Madisa described the company’s performance as resilient while Bidvest said its performance for the first half-year had been ‘driven by continued demand for everyday essential products’ and services.
However, a difficult operating environment negated growth in the company’s Adcock division and in the grain exports category. New business growth, additional tank capacity, and bolt-on acquisitions helped to mitigate the headwinds in bulk commodity movements and renewable energy product sales. However, unexpected weak performance in the Adcock Ingram division, as well as the impact of price-sensitive customers and weaker than anticipated discretionary consumer spend, contributed to challenges.
During the period, Madisa said there were ‘zero exports of maize’ while the company suffered a decline in renewables sales and a drop in volumes under Adcock Ingram. Despite this challenging environment, Madisa remained confident that the group delivered a decent half-year result, with strong contributions from acquisitions. Overall organic growth reduced to 1%.
The South Africa operations recorded improved gross margins on the back of ‘good cost of sales management’ across the hospitality category. The SA division posted a R721 million trading profit, contributing to overall results despite challenges in other segments.
Bidvest is currently undergoing strategic realignment in the automotive division, combining organic and acquisitive actions to help achieve an excellent overall result. However, sharp declines in renewable energy product sales and profitability, coupled with muted industrial demand, resulted in a drop in trading profits for the half-year.
The company also announced its interim dividend policy, increasing the interim dividend by 10% year-on-year due to strong performance across all segments. This decision was well-received by investors, reflecting confidence in Bidvest’s ability to navigate through challenging times.
In a statement, interim non-executive director David Mogwane expressed confidence in the company’s resilience and strategic direction. He emphasized the importance of sustainable growth and the need for continuous innovation to maintain competitive advantage in an evolving market environment.
Meanwhile, executive director of investor relations, Nkosazana Njelic, highlighted the company’s commitment to stakeholder value creation through profitability, dividend payments, and share buybacks. She also underscored the group’s focus on operational efficiency and cost management to ensure long-term sustainability.
Looking ahead, Bidvest is expected to continue its strategic realignment efforts in both the automotive and renewable energy sectors. This includes further diversification of revenue streams and the development of new products to address changing market demands.
The company has also announced plans for upcoming capital expenditures, which will be used to enhance operational efficiency and invest in new projects. These expenditures are expected to take place over the next 12 months, with a focus on key growth areas identified during the strategic review process.
In addition, Bidvest is exploring divestment opportunities, including the potential sale of its controlling interest in one of its key subsidiaries. The company has also expressed interest in acquiring new businesses that align with its long-term strategy and enhance its market position.
Despite the challenges posed by the pandemic and the resulting economic downturn, Bidvest remains optimistic about its ability to achieve sustainable growth. With a strong financial foundation and a clear strategic direction, the company is well-positioned to weather the storm and capitalize on emerging opportunities in the global market.
In summary, while the half-year results presented some challenges, particularly in certain divisions, Bidvest demonstrated resilience and adaptability as it navigated through unprecedented difficulties. The focus on innovation, operational efficiency, and stakeholder value creation will remain key priorities moving forward.
