JSE-listed services, trading and distribution company Bidvest Group has reported double-digit trading profit growth from each of its seven divisions for the financial year ended June 30.

The company’s performance was led by exponential demand in renewable energy products, as well as travel and tourism services.

Bidvest posted a 17.6% year-on-year increase in groupwide trading profit to R11.4-billion, as well as a 17.7% increase in normalised headline earnings per share (HEPS) to R18.84.  

Normalised HEPS excludes acquisition costs and amortisation of acquired customer contracts and is the measurement used by management to assess the underlying business performance.

The company was able to declare a final dividend of R4.39, a 20.6% year-on-year increase, bringing the total dividend for the year to R8.76. This compares with a total dividend of R7.44 for the prior financial year.

Bidvest’s profit for the year amounted to R6.3-billion, which is just under 17% higher than the R5.4-billion posted for the prior year.

CEO Mpumi Madisa says the double-digit trading profit growth reported by Bidvest’s seven divisions came off already high bases.

It is also commendable considering the weak and volatile macroeconomic backdrop, she adds.

She notes that the company keenly focused on margin management in the year under review, given unprecedented and persistent inflation in the group’s international geographies, as well as record wage inflation and high costs of doing business in South Africa owing to loadshedding and unreliable rail services.

The group’s trading profit margin improved by 22 basis points to 10%, despite a slight contraction in gross margin by 100 basis points to 29% as operating expenses were well controlled.

Notably, Bidvest reports the recovery in its Financial Services division exceeded expectations, while the Services South Africa division breached the billion rand trading profit mark, with trading profit growing by 21.4% year-on-year to R1.1-billion.

The Financial Services division increased its trading profit four-fold to R463-million.

The Freight division’s trading profit rose by 22.5% year-on-year to R2.2-billion, which is double its contribution from three years ago. The Freight terminal operations benefitted from elevated demand for bulk commodities, as well as a positive price mix augmented by healthy clearing and forwarding activity.

Consistent hygiene pool growth, strong consumable sales and new contract wins culminated in growth in the Services International division, coming off an already extraordinary 2022 financial year base. The Services International division grew its trading profit by 9.8% to R3.4-billion in the year under review.

A ten-fold increase in renewable energy sales elevated Commercial Products to new heights, while Branded Products delivered another strong result as the division navigated significant input cost pressures.

The Commercial Products division delivered a 21.4% increase in trading profit to R1.4-billion, while the Branded Products division grew its trading profit by 15% year-on-year to R860-million.

The Automotive division’s margin focus supported delivery of a record result, Bidvest explains. Trading profit rose by 11.7% to R914-million in the reporting year.

Moreover, the Adcock Ingram business in which Bidvest owns an effective 62.3% share reported an improved operational and financial performance for the reporting year, driven by improved demand for over-the-counter and consumer healthcare products.

Bidvest also owns a significant property portfolio, which delivered a 12.9% increase in trading profit growth to R635-million for the year under review.

Cash generated by operations of R12.2-billion was 4.1% higher than in the prior year. The group absorbed R2.6-billion of working capital in the reporting year compared with R1.4-billion in the prior year, reflecting the higher activity levels and product price inflation.

Madisa says Bidvest will continue finding pockets of opportunities for growth, while protecting its base in collaboration with employees, social partners and broader business.

She expects robust activity to continue in sectors such as renewable energy, mining, agriculture, tourism and basic infrastructure.

The company will also continue its cash discipline and margin management efforts while pursuing readily executable acquisitions.