• Bidvest, the diversified industrial conglomerate, announced exceptional results for the six months ending December 2022, projecting strong growth for the second half of the year. The company is optimistic about the future due to increased demand for renewable energy products, mining, agricultural, tourism, and hospitality operations. Bidvest credits its success to weathering significant increases in costs and disruptions caused by load shedding.
  • Revenue increased to R57.2bn, marking a 14% increase, with trading profit up 14.5% to R5.8bn. Bidvest’s international operations contributed R1.1bn, while the company generated robust cash of R7.3bn before investing R5.5bn in working capital to fund its pipeline of strategic growth opportunities. These growth initiatives included capex of R1.5bn to upgrade facilities and acquisitions of R2.3bn, such as the hygiene operations in Australia, which is already a successful global core focus of the group.
  • Despite a high base already achieved in previous results, six out of seven divisions reported real trading profit growth, with some business segments reporting record results for the past six months. Bidvest Bank showed significant performance turnaround following a restructuring of its operations. Meanwhile, the reconfigured automotive division benefitted from strong car sales at attractive margins. Strong demand for bulk minerals and agricultural commodities drove profits for the Freight Division, while growth in tourism volumes uplifted the travel and hospitality operations. This segment is expected to continue to show strong growth in the second half of the year ending June 2023.
  • Bidvest’s entry into the renewable energy sector with solar panels, inverters, and batteries has been a resounding success, with robust demand growth resulting in revenue growth of 17% to R8.4bn in the commercial products division during the past six months, on the back of load shedding.
  • HEPS and Normalised HEPS grew by 15.3% to 938.5c and 983.4c, respectively, with the interim dividend of 437c up by 15%. The ROIC increased from 15.5% to 16.3%. Management delivery has been outstanding, with a pipeline of potential growth initiatives in a diversified investment holding company that has successfully bedded down acquisitions and has a strong balance sheet and innovative management team. It is a stock I own for clients in managed portfolios.

 

By Ron Klipin