JSE-listed Bidcorp says that, in regions and countries where lockdown restrictions have been eased, it has seen demand in the discretionary spend sector recover; however, any businesses associated with large crowds, such as entertainment, sports events, business travel, conventions and conferences, aviation and the cruise line industry remain largely shuttered.

This has contributed to a mixed operational and financial performance for the group during the quarter ended September 30 – the first quarter of the group’s 2021 financial year.

In an update to shareholders published on November 17, the group noted that the requirement by major institutions, many of which are in large inner capital cities, for employees to work from home has reduced activity levels of Bidcorp’s national customers.

Some of this activity has shifted into suburban areas and more rural locations as people continue to seek out eating-away-from-home opportunities, Bidcorp pointed out.

Most independent customers have reopened and have been able to adapt to the varying economic conditions relatively well. The recovery of Bidcorp’s larger national customers has, however, been much slower and activity levels remain subdued.

“Our diversification into the home delivery channel in a few businesses has reduced as activity has returned in our traditional channels; however, we have continued to supply some products into independent retail-related channels.

“The overall contribution of these initiatives is small and remains generally noncore,” Bidcorp said.

Further, nondiscretionary demand from its institutional customers, including serving hospitals, aged care, prisons, the military and government departments has continued and is relatively stable.

Bidcorp’s governmental support programmes in several countries to provide food and care packages to the most vulnerable members of society through home delivery have, meanwhile, ceased in most jurisdictions.

The company noted that it had seen limited cases of infections within its various businesses around the world, with any cases managed within strict business best practices and local government requirements. None of these infections have materially impacted on the group’s ability to operate, it said.

CURRENT TRADING PERFORMANCE

Bidcorp noted that the 2021 financial year had started out relatively well, with most geographies seemingly coming out of the worst of the Covid crisis, with July having delivered a strong financial performance, particularly in Europe and the UK.

However, it noted that conditions had started to deteriorate in August and had worsened, with Europe and the UK now firmly in the grip of a harsh second wave of Covid-19 infections that is showing little sign of easing.

This is having a significant impact on Bidcorp once again.

“Fortunately, we are a diversified business, with Australia, New Zealand and Asia doing well, and our other emerging market constituents continuing to improve on a month-to-month basis,” it stressed.

Group sales (in constant currency) for the financial year to date peaked in the week ended August 2 at 87% versus the corresponding week in the prior financial year, but had eased to 71% of the corresponding weekly sales for the week ended November 8.

“All our businesses continue to fully operate in each geography, however, each country is at a different stage of the Covid crisis,” the group said.

It noted that its gross profit percentage in the quarter has been maintained at similar levels to the comparative quarter of the prior financial year, benefiting from the mix of smaller independent customers.

With lowers levels of activity, operating costs as a percentage of net revenue increased from 18.8% to 19.5% for the September quarter.

The group reported “pleasing” earnings before interest, taxes, depreciation and amortisation for the quarter equivalent to 5.2% of monthly net revenue, compared with 5.9% in the prior comparable period.

As at March 31, the group’s net debt was 338-million.

Bidcorp said it believes the group has sufficient liquidity for the foreseeable future.

It noted that it had taken remedial action with its underperforming businesses and that the recovery of these businesses was progressing.