Diversified industrial group Bidvest on Monday reported solid results despite the tough economic times.
CEO Mpumi Madisa said the company experienced a contraction in three isolated areas including maize export and Adcock pharmaceutical volumes.
However, the company’s services SA division was a standout performer, increasing profitability by 16%.
“Four out of six divisions performed well, with the services SA being the star performer. All the clusters in this business were significantly up on an organic basis,” said Madisa.
The division’s performance was driven by robust travel volumes, new business in security, increased cargo volumes, good cost control and growth in hospitality services, particularly at airport lounges. Additionally, the heatwave-driven demand for water and coffee products contributed positively.
In contrast, the company’s pharmaceutical business Adcock Ingram faced challenges amid lower volumes.
“Consumers [particularly in the lower living standard measure (LSM) segment] are under pressure, which is evident in the declining Adcock numbers, while industrial demand was also lower,” Madisa said.
“These challenges are isolated to specific areas, which affects demand across various sectors. Consumer pressure is a critical factor in understanding the broader market dynamics that Bidvest is facing.”
The company completed six bolt-on acquisitions across various sectors, including two in the automotive division, a printing and labeling business for branded products, and additions to facilities management and hygiene businesses in the UK.
Bolt-on acquisitions are small purchases which are integrated into existing businesses.
“This approach allows the company to enhance its existing operations without taking on large-scale integration challenges. By focusing on bolt-on acquisitions, we are able to build on our strengths while minimising risks associated with larger, more complex deals,” Madisa said.
Bidvest exited financial services due to significant changes in the banking industry that include consolidation, and the need for significant capital investment to remain competitive.
After reviewing its options, the company chose not to invest further capital into this segment but instead signed an agreement with Access Bank to take over Bidvest Bank.
“Consolidation had left second-tier banks [in which Bidvest financial services was operating] competing with first-tier players, making it challenging to operate without substantial capital investment,” Madisa said. “We are very comfortable with this decision.”
Bidvest’s revenue for the six months to end-December grew 5.7% to R64.5bn.
It declared an interim dividend of 470c per share, representing a 1% increase.
Trading profit remained flat at R6.3bn with a margin of 9.7%, a decrease of 66 basis points.
Profit from continuing operations was 2% lower at R3.3bn.
Headline earnings per share (HEPS) increased by 3% to 1,015.5c, while normalised HEPS rose 1% to 1,057.7c. Cash generated by operations rose by 18% to R4.5bn.
Update: March 3 2025
This story has been updated with more information.
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