In a market update on its global trading environment in the year-to-date, JSE-listed foodservice group Bidcorp reports a trading profit growth of 10% year-on-year so far, supported by an almost zero food inflation environment across its basket of offerings.

The company’s headline earnings a share have also grown by about 10% year-on-year in the months ended April 30, which surpasses the record headline earnings in the comparative trading period. 

Currency volatility has, however, negatively impacted on Bidcorp’s rand-translated results, with year-to-date foreign exchange movements having had a 3.8% adverse impact on group rand numbers.

As the group has more than 90% of its operations located outside of South Africa, the management of the company evaluates the constant currency performance of the businesses as a true measure of performance.

The upcoming third quarter is generally the quietest in terms of trading in the UK and other European businesses owing to the northern hemisphere winter, while demand in Australia and New Zealand remains subpar.

Bidcorp adds that emerging market demand has held up well in the year-to-date, except for Greater China where conditions remain challenging. Business performances in South Africa and South America have been increasingly positive.

The company explains that consumer spending remains generally subdued owing to the ongoing cost-of-living pressures and heightened uncertainty caused by the US tariff movements.

Interest rates have decreased in many markets, however, but this has not translated to improved consumer spending.

The operating environment therefore remains challenging, with core inflation still being sticky and tracking higher than food inflation in most parts of the world, the group points out.

Labour costs are also being influenced by high minimum wage increases, often at higher rates than core inflation. Additionally, Bidcorp says labour availability in essential driver and warehouse operative operations remains tight, impacted by low unemployment levels in many countries.

This while global shipping dislocations and higher supply chain costs prevail. The costs of replacing capital equipment and investing in new depots also continue to escalate, which negatively impacts Bidcorp’s cost base.

The group remains focused on being competitive and growing its market share globally, including by sacrificing margins to increase volumes in some instances.

Bidcorp’s earnings before interest, taxes, depreciation and amortisation margin of 5.8% in the year-to-date remains about 20 basis points better than the same months of last year.

The company is confident in the resilience of its businesses and customers despite economically tough and stagnant markets.

“The outlook remains positive for the balance of the year and the next financial year. Our pipeline of bolt-on acquisition opportunities will widen Bidcorp’s geographic reach and allow for new product offerings.

“Our capital structure provides significant financial firepower for the right opportunities,” CEO Bernard Berson concludes.