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Bidvest Profit Beats Estimates on Automotive, Food Growth

Aug. 26 (Bloomberg) -- Bidvest Group Ltd., a South African company with interests ranging from food to cars, said full-year earnings rose 5.9 percent, boosted by rising profit at its automotive unit and growth outside its home market.

Headline earnings per share, which exclude one-time items, advanced to 15.61 rand in the 12 months through June, the company said in a statement today. That beat the 15.53-rand median estimate of eight analysts surveyed by Bloomberg. Sales rose 15 percent to 153 billion rand ($15 billion), compared with a 150 billion-rand estimate.

Trading profit at Bidvest’s South African car-dealer unit advanced 28 percent, while the Johannesburg-based company also achieved growth in the Asia-Pacific region, Australia and Europe. The performance came even as demand weakened in many markets, Bidvest said.

It is a “very solid set of results from a very solid company,” Anthony Geard, an analyst at Investec Securities Ltd., said by phone from Cape Town.

Bidvest shares rose 2.7 percent to 248.51 rand at the close in Johannesburg, the biggest daily rise since July 4. The stock has gained 15 percent this year, compared with a 10 percent gain on the FTSE/JSE Africa All Share Index.

Weak Rand

Bidvest, which sponsors U.K. soccer team Sunderland Football Club, earns 61 percent of its trading profit in South Africa, where economic growth has been hurt by labor strikes, high inflation and a weak rand. Headline earnings per share were boosted 3.6 percentage points by the South African currency, which has declined 17 percent against the dollar this year, the worst performer of 16 major currencies tracked by Bloomberg.

“Weakness in the rand and the likely spike in inflation are expected to present some cost pressures, but these pressures also give rise to trading opportunities,” the company said.

Bidvest is anticipating an improvement in operations in Europe, which has been a tougher market in which to operate than Asia Pacific and South Africa, Financial Director David Cleasby said in a phone interview from Johannesburg today. “We had a strong start for the year,” he said. “We are optimistic that going forward things should get better.”

Bidvest’s food services unit generated 54 percent of sales in fiscal 2013, the company said, with Europe and Asia Pacific accounting for about half of revenue on a geographic basis.

Pursuing Acquisitions

An offer by Bidvest for a majority stake in South African hospital products maker Adcock Ingram Holdings Ltd. was rejected earlier this year. Its pursuit of the company, which has received a non-binding offer from Chilean drugmaker CFR Pharmaceuticals SA, remains a “work in progress,” Cleasby said. Bidvest is pursuing growth by acquisitions and is seeking targets in Brazil and South America, he said.

“We still have lots of capacity to finance our growth,” the financial director said. The company has about 10 billion rand to spend on acquisitions, he said. Bidvest raised its dividend by 16 percent to 720 cents per share.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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