Bidvest’s profit increases in a weak economic environment


The diversified Bidvest group on Monday published “credible results” for the fiscal year ended June 2019, in a market characterized by weak economic growth as well as significant commercial and fiscal uncertainty and volatility.

Revenue was largely unchanged at R77 billion, while trading profit rose 3.5% to R6.7 billion.

Bidvest’s activities include automation and financial services, including Bidvest Bank, freight and Bidvest Services, which remains the largest employer in the group, employing around 9,850 people in South Africa, Ireland and the UK .

The group said exceptional cost and capital discipline as well as improved margins were highlights in a volatile business environment. The combined services activities, comprising the Services, Freight and Financial Services divisions, representing two-thirds of the result, grew by 6.4%, while the result of the trading and distribution activities contracted slightly.

Strong profitability gains were made at Adcock Ingram as Comair acknowledged the success of the claim against SAA, which increased Bidvest’s share of profits from these associated companies.

Earlier in August, Bidvest Group took control of pharmaceutical company Adcock Ingram after its stake increased to 50.1%.

In its financial services division, business profit for the year was down 7.5% to R 584.5 million.

“Bidvest Bank has had a reasonable year despite the lack of contribution from new full maintenance leases for the fleet and some large contracts are running out,” the group said.

Vehicle deliveries under the new Transnet heavy-duty vehicle contract did not start until the new financial year. Deposits rose 15.4%, with the nascent supply of business and personal banking services showing “encouraging signs of growth.”

Investment portfolios ended the year significantly lower amid poor performance by the JSE market, Bidvest noted.

“Bidvest Insurance has had a disappointing year and has realigned its offer. The rapidly growing life insurance business continues to cause further trade tensions, ”he said.

Highlights of the reports

  • Trade profit up 3.5% to 6.7 billion rand
  • Overall profit increased to 4.6 billion rand
  • HEPS rose 9.8% to 1,352.1 cents
  • Normalized HEPS increased by 5.2%
  • 7.1 billion rand in cash generated from operations
  • R 5 billion spent on acquisitions and capital expenditures
  • Declared final dividend of 318 cents per share, up 5.6%

Bidvest said South Africa needs real GDP growth in order to create jobs and prosperity for all. This is the responsibility of both the public and private sectors.

“The government’s ability to credibly address the precarious financial situation of several state-owned enterprises, the initiation of development programs and the ongoing maintenance of key entities and facilities remain essential to revive the South African economy.

“The private sector must invest to establish and develop productive and efficient businesses and industries,” he said.

Bidvest said it would continue to invest strategically to generate long-term sustainable profits, “while remaining aware of the right time to embark on large-scale investments”.

“There is sufficient room for maneuver to pursue the Group’s growth strategy in its existing markets, as well as to continue to acquire divisional activities and to seek larger and value-added opportunities locally.

“Internationally, we are aiming for expansion into selected niches of services and business products,” he said.

Read: Bidvest Bank launches new account in retail banking


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