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- Bidvest says it expects to report healthy revenue growth and strong real trading profit in the 10 months to end April.
- That's despite the rising input costs, exacerbated by load shedding in its factories.
- The group's share price has soared a fifth so far in 2023 as investors watch its renewables growth story.
- For more financial news, go to the News24 Business front page.
Industrial conglomerate Bidvest said on Thursday its "impressive" growth streak has continued unabated in the 10 months to end April, with a focus on its efficiencies as well as demand from a recovering tourism industry helping to offset unprecedented load shedding and pressure on consumers.
The group, whose business interests include freight services, energy, financial services, branded goods and vehicles, said in a voluntary update that its performance over the 10 months was similar to the double-digit growth it saw at its half-year.
Despite pressure on consumers, the company said it was boosted by the current buoyancy in agriculture, mining, renewable energy and the travel and tourism industries. The Brian Joffe-founded group said that with a "strong" balance sheet, there were "several possible corporate action opportunities," both locally and offshore, at various stages.
The group, valued at almost R88 billion on the JSE, saw its shares lift just over 1% in late afternoon trade on Thursday.
The latest trading update comes after a strong first half, which ended in December 2022. After reporting that revenue and trading profit both grew about 14%, its share price soared by almost 15%.
Bidvest's share price has gained 21% more value since the beginning of this year, far surpassing the JSE All Share, which has risen 5.5%.
Click here for Bidvest's share price data.
Growth nodes
Bidvest said on Thursday that international travel has normalised, boosting the demand for the services of Bidvest Services International, which include travel management, catering and the group's airport lounges, to name a few.
Bidvest Freight would have also benefitted from the bounce-back of international travel as it offers airport ground handling services.
Bidvest further attributed its fortunes in part to "very strong" demand for LPG and bulk commodity volumes.
"Demand for alternative energy products accelerated while corporate, mining and industrial demand for everyday essential products remained robust in an increasingly competitive market," it said.
However, consumer strain is starting to show in Bidvest's vehicle and appliance sales. The company will provide more details when it publishes its 2023 results on 4 September.
The other emerging pain point is rise in wage increases in all regions in which Bidvest operates. But that was to be expected given stubborn global inflation, which has seen workers demand higher salaries to survive. Bidvest said its management is actively engaging with customers to recover this cost. The group said the cost of running its factories, mainly during load shedding, was another key pressure point.
But Bidvest said it put an unrelenting focus on gross profit margin and cost management as input cost rose and has therefore managed to generate "strong real trading profit growth" in the 10 months under review.
The group has also taken a strategic decision to bulk up its renewable energy business in the past two years, a move it has described as a "resounding success".
Bidvest Renewable Solutions designs, supplies and installs solar PV panels, and lithium batteries, which are also used in inverters, and electrical consumption management devices, particularly for geysers. In its 2022 integrated report, the group said it also plans to directly finance and insure associated alternative energies infrastructure assets.
The group also spent R1 billion building an LPG storage terminal in Richards Bay in 2020. Last year, it announced that it planned to spend another R500 million building an inland LPG terminal in Isando.
