Bidvest saw a good all-round performance for the first four months of financial 2023, maintaining the growth momentum of the international services, trading and distribution group, its chief executive Mpumi Madisa said on Friday at the annual meeting.
Revenue growth resulted from contract wins, modest overall activity growth and pricing. Pockets of real growth were achieved from travel and hospitality, commercial consumables, increased demand for certain South African commodities, as well as an expanding renewable energy market, she said.
All resolutions received the required majority approvals at the meeting.
The share price traded 2.6% higher at R227.42 Friday afternoon.
Trading profit growth mirrored the top line on the back of active margin and expense management.
“Our business services operations, which include Services International, Services South Africa, Freight and Financial Services divisions, delivered an excellent performance,” she said.
Travel and hospitality related demand continued to recover strongly as expected, bulk volumes handled through the terminal operations increased despite rail challenges in South Africa, new business wins across most operations annualised, while the capital deployment at Bidvest Bank improved at a higher net interest margin, she said.
The BIC acquisition was delivering in line with expectations and had secured “strong new business wins.”
Contractual price increases, largely resulting from gazetted wage increases across all operational territories, had been passed on.
Significantly higher fuel and consumable prices were harder to recover. The non-repeat of Covid-related work had created a high base in the hygiene and cleaning services businesses, particularly in the first half.
“We remain confident that slightly higher office occupancies, sourcing and cost synergies, with continued growth in the hygiene and contract pools, will sustain the annual profit contribution,” she said.
The trading and distribution operations, which include the Branded Products, Commercial Products and Automotive divisions, performed well.
Significant price inflation of goods, limited infrastructure activity and frequent load shedding were the main headwinds, but strong renewable energy demand, increased office occupancy and delivering into healthy order books supported activity.
While the strain on consumer spending caused by cost-of-living pressures had started to manifest, the overall portfolio mix remained reasonably defensive, she said.
“The operating leverage in these businesses was somewhat dampened by higher operating expenses as well as investment to mitigate electricity and water infrastructure failures. Margin management remains top of mind,” she said.
Corporate action, integral to the growth strategy, continued “as we were participating in processes, both locally and offshore, which are in varying phases of completion.”