Coronavirus likely to hurt Bidcorp’s results |

Booming food services industry hit by outbreak, but to what extent it will affect results is still unclear

BERNARD Berson, chief executive of Bid Corporation (Bidcorp), warned yesterday that the coronavirus outbreak in China was likely to hurt the food services firm’s results in the second half of the year, but to what extent was unclear.

The coronavirus outbreak in China has cast a shadow over its booming food service industry with Chinese consumption lower, as they avoid going to restaurants and hotels as well as travelling.

However, Berson, who was presenting the company’s result for the six months to December 31, said the company had proven that it could withstand any challenges, despite the volatile social, political and environmental circumstances in some operating geographies.

Bidcorp’s operations are exposed to the political unrest in Hong Kong, Chile and the Brexit uncertainty in the UK.

“The recent political and social upheaval in some markets combined with the unfolding coronavirus pandemic is likely to impact growth prospects into the second half of the year though the severity is impossible to predict at this stage,” Berson said.

Despite these short-term disruptions, the fundamental demographics and industry drivers of their global food service markets remained positive, he said.

“We produced a resilient performance during the first half of the year, despite the difficult conditions in some of our markets.

“Our investments in Spain and Germany continue to under-perform. However, significant focus and effort are being directed to improve the platforms from which we can realise the potential of each of these markets,” Berson said.

In the results, Bidcorp reported a 3.2 percent increase in revenue to R68.2 billion and trading profit was up by 9.2 percent to R3.6bn.

Its headline earnings per share increased by 4 percent to 728.3 cents a share while basic earnings per share inched up by 3.8 percent to 725.4c.

The group declared an interim dividend of 330c a share, up by 6.5 percent compared to last year.

The group said that its two discontinued operations, the UK Contract Distribution (CD) and PCL distribution were nearing completion.

The group said that CD benefited from a major contract win in the previous year. However, poor consumer sentiment in the quick service restaurant (QSR) market impacted volumes.

The CD disposal remains on track for March 2020.

It said the PCL distribution business performed to expectation, despite lower volumes, generating a small contribution.

The group said Bidcorp remained focused on growth opportunities and would consider bolt-on acquisitions should they arise and by selling more products and gaining new customers.

“Acquisitions, as opportunities arise, would take the form of in-territory bolt-ons to expand geographic reach or product ranges and through strategic acquisitions in new markets,” Berson said.

Bidcorp shares closed 0.35 percent higher at R315.08 on the JSE yesterday.