Bidvest sees higher annual profit ahead
INDUSTRIAL behemoth Bidvest, with a diverse portfolio from security and cleaning to financial services, said yesterday it expected to increase annual profit, boosted by trading profit growth, which had accelerated in almost all businesses, supported by strong cash generation.
In a trading statement and business update for the 10 months to April 30, it said all divisions delivered improved performances compared to the interim period, despite the Covid-19 environment.
This was expected to accelerate because of the limited demand and restricted trade activity in the last quarter of full-year 2020.
Headline earnings per share and earnings per share for the financial year to June 30 were expected to be 394 cents and a loss of 136.6c, respectively, more than 20 percent higher compared to the previous year.
The annual results are likely to be out on Monday, September 6.
A further trading statement would be issued to provide specific guidance.
Bidvest said its growth and investment aspirations, both locally and internationally, had been advanced since December.
The bolt-on acquisitions of Interact, a technical service provider in Ireland, and Axis Group (Axis), a security and cleaning group in the UK, were concluded by Noonan, a company that delivers services ranging from cleaning and security to technical services and facilities management. These businesses performed in line with expectations, Bidvest said.
Noonan’s facilities management services continued their growth trajectory, augmented by Axis, despite no cleaning of entertainment venues and a competitive UK market.
The South African businesses delivered good results with the exception of the travel, hospitality and related activities.
“Operational cash generation and asset management have been strong, particularly in light of supply chain challenges and cash flow pressures experienced by some customers. The maturity profile of group debt is proactively managed. The management team remains committed to ensuring an acceptable shareholder return is generated,” it said.
Trading profit growth from services had been exceptional, with good underlying performance from all three territories. PHS, acquired effective May 1, 2020, delivered a strong performance, as the hygiene pool continued to grow while hygiene services delivered to government vaccination sites and other Covid-19-related revenue streams were optimised.
The annuity-type businesses, bulk terminals, as well as industrial and vehicle trading businesses delivered strong growth.
Despite stricter lockdowns in the UK and Ireland, the businesses reported good results. Tight expense control and efficiency improvements resulted in margin being either maintained or improved in most businesses, it said. However, the businesses exposed to travel, tourism and hospitality-related activities remained under pressure.
The facilities management and security and aviation clusters performed particularly well, it said.
The terminal operations, stevedore and ships agency businesses performed well on the back of bulk commodity, agricultural and LPG volumes. General cargo, air freight and import volumes remained weak.
The management of Bidvest said they were working on closing out the final conditions precedent in terms of the signed sale and purchase agreements relating to the disposal of both Bidvest Car Rental and BidAir Services.
The Thesele Consortium last month signed an agreement to buy Bidvest Car Rental, while in April it was announced that National Aviation Services, Colossal Africa and a consortium comprised of the current executive management team had signed an agreement to acquire BidAir Services.
It said trading profit remained under significant pressure, with Bidvest Bank’s non-interest revenue well down, because of lower demand for foreign exchange, reduced transactions across channels and the net roll-off of fleet management units.
Bidvest shares closed 0.94 percent firmer at R196.07 on the JSE yesterday.