JSE-listed foodservice group Bidcorp, in an update to capital markets on November 12, said it had increased its trading profit by 10% for the four months ended October 31, on the back of a low food inflationary environment.

The international group's constant currency results to the end of October reflect a continuing resilient performance, it said.

Currency volatility negatively impacted the group's rand-translated results, with year-to-date foreign exchange movements to the end of October having a 3% adverse impact on the company's rand numbers, with the potential for further impacts as the financial year progresses.

“With the group having more than 90% of its operations located outside of South Africa, management continues to evaluate the constant currency performance of the businesses as the correct measure of performance,” Bidcorp notes.

Reflecting on overall market conditions, the company says consumer demand remains subdued as the cost-of-living crisis continues to impact spending in most countries.

“Although interest rates have slowly started coming down in many markets, we haven’t really seen any improvement in consumer behaviour and sentiment yet. Observations from large retailers in many markets note that tough economic conditions are driving their customers to spend more in-home and not eating out as much,” the multinational group states.

The UK and Europe have continued to grow during the four months, despite the impact of a cold and wet northern hemisphere summer in the peak holiday season. In addition, severe flooding in September in Eastern Europe had a short but significant sales impact on Czech Republic and Poland.

Australian demand is stable, however, we are experiencing weaker hospitality conditions in New Zealand.

Further, in emerging markets, except for Greater China, hospitality demand has held up despite generally benign to unfavourable economic conditions. Sentiment in South Africa is more positive. Greater China activity remains weak despite government stimulus, Bidcorp points out.

“The operating environment has remained challenging, food inflation has all but disappeared, but core inflation remains sticky, tracking higher than food inflation in most parts of the world.”

Additionally, labour costs, which comprise a large component of Bidcorp's cost base, continue to escalate with wage increases higher than core inflation and driver and warehouse operative positions difficult to fill.

Shipping disruptions and supply chain difficulties remain. Replacement of capital equipment, land, and new depot investment costs continue to escalate, negatively impacting the cost base, the group says.

Bidcorp adds that its independent customer base remains resilient in tight economic conditions, and it is actively managing credit risk in all jurisdictions.

Market competition is heightened, particularly where the group is exposed to tenders for larger national type business, as competitors try to regain market share.

“We, however, remain disciplined in evaluating the mutual benefits to be derived from these activities. Generally, our businesses weigh up the need to balance volume growth against margins depending on prevailing consumer demand,” it details.

Group revenues continue to reach record levels into the first week of November, increasing 7% in constant currency terms against the record performance of the comparative period in the prior year.

Operating costs as a percentage of net revenue, or its cost-of-doing-business, through to October increased to 18.8%.

The primary driver of this increase is labour cost pressures where high levels of employment persist in many countries. The increase in gross margins has more than mitigated the increased cost-of-doing-business, Bidcorp states.

Further, net capital investments to September amounted to R1.6-billion, up from R1.4-billion in the comparable period in the prior financial year. The amount allocated to the creation of future capacity was R1.1-billion, and the replacement of capital equipment, most notably delivery vehicles, was R500-million.

While this investment comes at a cost and detracts from short-term performance, impacting results in the UK, Italy, Australia and New Zealand, it remains the correct long-term decision to ensure the sustainability of its operations, it says.

“Despite the challenging macroeconomic environment experienced in the first four months of the 2025 financial year, we are growing in line with our expectations in economically tough, stagnant and zero-inflation markets.”

Further, there remains a promising pipeline of organic and acquisitive future opportunities, affirming the effectiveness of its long-held strategic approach, Bidcorp says.

“Our outlook remains positive, and we look forward to even brighter days ahead as interest rate declines start to improve consumer sentiment. We are hopeful that the important Christmas trading period ahead will see a continuation of the trend of the past few months.”

Bidcorp has a portfolio of businesses at various stages of growth and size along the maturity continuum, presenting significant opportunities in the coming years. Simplicity, tight asset and cash management, and technological advancements that enhance its offerings remain core to the group's strategic focus.

The group has committed to a new target of a further 25% reduction in Scope 1 and 2 carbon emissions by 2034.

The company continues to invest in reducing its carbon footprint and has focused these investments firmly on the areas within its control, such as energy efficient refrigeration, generating and sourcing renewable energy, and lower carbon-impact distribution capabilities. It continues to look for technological advancements that will help it on this difficult journey, the group says.

“Bidcorp has recorded a resilient and robust performance in the first part of the fiscal year, despite the ongoing global challenges we are contending with. Our teams have once again risen to the occasion and performed brilliantly in a tough environment, executing very well on a clear and deliberate strategic framework,” says Bidcorp CEO Bernard Berson.