International food services group Bidcorp says it is well placed to offer alternatives to consumers who are not willing to absorb price increases, and remain competitive.
High food inflation in SA and abroad, driven by labour, energy and fuel cost increases, started to slow only in the latter stages of the group’s 2023 financial year, but Bidcorp said nearly all its businesses were able to “substantially pass through product and cost inflation increases”.
CEO Bernard Berson said in the results presentation that some consumers were pushing back, who a year ago might have accepted price increases.
“We’re in a great position to offer them alternatives, because of our house brand strategy. Because of our manufacturing strategy, we are able to [offer] value propositions that keep us exceptionally competitive in the market,” he said.
The group reported a surge in annual profit and hiked its payout despite high food inflation and global economic uncertainty as most of its businesses were able to pass on costs to consumers.
The company, valued at about R135.3bn on the JSE, said in its results for the year to end-June that profit was up 41.5% year on year to R6.95bn and headline earnings per share (HEPS), a common profit measure in SA that excludes certain items, up 35.4% to 2,082.9c.
The group’s Australasia business grew revenue and margins in the period under review. It said its UK operations saw an uptick in new contracts.
Bidcorp was spun off from Bidvest in 2016 and Europe is now its largest region by trading profit, generating about a third, with Australasia hot on its heels.
While more than half of the company’s shareholders are in SA, only about 15% of trading profit is made in emerging markets such as SA, Brazil and China.
The company is a wholesale food supplier and a provider of catering equipment and nonfood essentials.
Revenue increased more than a third to R196.3bn, core earnings (ebitda) 36.3% to R11.8bn and the total dividend for the year came to 940c per share, a 34.3% increase year on year.
Berson said the long-term growth prospects of the food service industry remain positive despite the current global economic uncertainty with higher interest rates weighing on businesses and consumers alike.
“The strong bounce in consumer behaviour experienced through the 2023 financial year has tapered off, which is, in our view, a return to normality,” he said.
“We believe there remains more market share to be gained in every geography we operate, and we have the management teams and the business model to continue to outperform,” he said.
Berson said in an interview with Business Day that the results were expected to be down after a stellar year, as the recovery normalises.
“The year ahead is certainly not going to be the year that we just finished. The year that we just finished was spectacular, it was fantastic, it was great,” he said.
“The challenge for us now is how to grow off that very high base and see that there still is growth, but the growth is going to be far more normalised, far more subdued and far more, I guess, difficult to get,” he added.
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