JSE-listed food service group Bidcorp achieved a 10% year-on-year increase in headline earnings a share to R12.67 for the six months ended December 31. This was despite the fact that currency volatility negatively impacted on its financial performance in rand terms.

Basic earnings a share decreased by 2% year-on-year to R11.21, primarily owing to noncash losses incurred on the exit of the group’s German operations.

Revenue for the six months increased by 3.6% year-on-year to R117.9-billion.

The company realised 5% organic growth, after adjusting for food-basket inflation and acquisitions, Bidcorp CEO Bernard Berson pointed out in a February 26 statement.

The board declared an interim cash dividend of R5.60 a share.

Activity levels in the first quarter of the 2025 financial year were impacted on by unseasonally cold and wet September weather in the northern hemisphere, coupled with extreme weather-related flooding in Eastern Europe, to the detriment of the UK and European businesses.

However, there was an improvement into the second quarter and over the festive season.

Food inflation has disappeared, although cost inflation remains sticky, driven by ongoing wage pressures from labour availability, particularly in the warehouse and driver categories. As economic conditions have tightened in many geographies, customers have become more price-sensitive and competition has increased, Berson noted.

Group trading profit increased by 6.8% to R6.3-billion. The trading profit margins in the first half of the current 2025 financial year improved to 5.3%, slightly higher than the 5.2% margins achieved in the first half of the 2024 financial year.

Gross profit percentage at 24.1% held up well, particularly “as management in several businesses aggressively sacrificed some margin to maintain volumes and achieve market share growth”.

Supply chain disruptions, particularly arising from the Red Sea crisis, resulted in a measure of overstocked positions, said Berson.

Further, the overall cost-of-doing-business increased to 18.8%, higher than the 18.5% increase in the comparable half-year period in the prior financial year. This was driven primarily by higher cost inflation, which is persistently tracking higher than food inflation.

The increase in gross margins has more than offset the increased cost. Labour costs, which account for about two-thirds of the cost base, remained high as relatively full employment in many countries creates competition for a scarce pool of talent.

Bidcorp's investment activity, primarily into new distribution capacity, has continued to cater for current and future growth.

“Bidcorp continues to invest in strategic distribution facilities to provide for future capacity, as well as value-added manufacturing opportunities. These investments come at a short-term cost in terms of profitability, but management remains of the view that these are the correct long-term decisions to ensure the future growth of the businesses.

“New technologies for renewable energy, refrigeration, energy efficiency and logistics optimisation remain a strategic imperative in terms of minimising the environmental impact.”

Gross capital investments in property, plant and equipment of R3.3-billion, up from R2.9-billion in the comparable 2024 half-year period, remain elevated, but include R1.7-billion of expansionary investments in new capacity, the largest portion of which has been in the UK.

Bidcorp's UK division delivered an improved performance in its core foodservice operations and also benefited from an acquisition to supplement the regional independent activities, he said.

Acquisition activity increased. Eight bolt-on acquisitions were concluded in the half-year, with several more opportunities under consideration, he added.

Bidcorp’s strategic focus remains on the wholesaling of food and allied products to the eating-out-of-home market through developing Own Brand and imports, moving into niche value-add manufacturing, focusing on growth through selling to the correct mix of customers, serviced by well-located infrastructure and enabled by world-class technology solutions.

Growth is further supplemented by in-territory bolt-on acquisitions to expand geographic reach and product range, or via strategic acquisitions to enter new markets, Berson added.

In terms of prospects, Bidcorp said activity levels through January and into February held up in line with expectations, given that these are slow trading periods owing to the northern hemisphere winter and Chinese New Year.

Food inflation is anticipated to remain muted while cost inflation, mainly derived from high wage levels, is likely to remain sticky.

Consumer spend is anticipated to remain under pressure as the cost-of-living crisis continues, with high interest rates likely to prevail.

Despite the short-term pressures in many jurisdictions, the medium- to long-term growth fundamentals of the foodservice industry remained positive, he said.