Bidvest gears up for rich pipeline of acquisitions

Bidvest CEO Mpumi MadisaPicture: Masi Losi.

Bidvest CEO Mpumi MadisaPicture: Masi Losi.

Published Sep 5, 2023


Bidvest, the services, trading and distribution group that delivered a strong financial performance in the year to June 30, had an “exciting” acquisition pipeline, CEO Mpumi Madisa said yesterday.

The Bidvest Group (UK) plc upsized and restructured its multi-currency funding facility and as at June 30 there was an offshore merger and acquisition war chest of 560 million euros (R11.37 billion).

“It is the richest pipeline of acquisitions we have had in a long time.” Madisa said in an interview. She said the acquisitions, some of which were likely to be announced at the half year stage, were likely to involve small to medium size businesses, and vary between the R200m to R3.5 billion enterprise value range.

“Corporate action remains an integral part of our growth strategy. We are participating in processes, both locally and offshore, which are in varying phases of completion,” she said.

Acquisitions in the past year included A2, a complementary forklift hire business, Autosure, an underwriter of insurance and value-added products into the motor retail industry, and Sahicasa, a Spanish-based pest and hygiene services business.

Bidvest Australia acquired BIC effective July 7, 2022, as part of the group’s international growth strategy.

Madisa said that in spite of the strong results for the 2023 financial year, and although she was optimistic about group prospects, she anticipated that the strong earnings growth trajectory of the past three years would normalise in 2024.

“We will find the pockets of opportunity while protecting our base, not in isolation, or at the expense of, but in collaboration with our employees, social partners and broader business…we are expecting robust activity in key sectors like renewable energy, albeit not at the frenetic pace seen this year, mining, agriculture, tourism and basic infrastructure, while at the same time alert to the pressure in discretionary spend and heightened competition,” she said.

Bidvest’s second six months improved on an already strong first half performance, led by strong demand in renewable energy products as well as travel and tourism services.

The recovery in the Financial Services division exceeded expectations, Services South Africa breached the billion rand trading profit mark, and Freight delivered profit exceeding R2bn, double its contribution of only three years ago.

Madisa said renewable energy sales - the group supplies all manner of renewable energy equipment - experienced a ten-fold increase during the year.

“Seven (of the group’s) divisions reported double-digit trading profit growth, off already high bases. This is commendable considering the weak and volatile macro backdrop”, said Madisa.

Margin management was a key focus, particularly in the group’s international geographies, together with record wage inflation and the additional cost of doing business caused by load shedding, and unreliable rail services in South Africa.

The trading profit margin improved by 22 basis points to 10.0% as operating expenses were well controlled.

Normalised HEPS, which excludes acquisition costs and amortisation of acquired customer contracts and is the measurement used by management to assess the underlying business performance, rose 17.7%. A final dividend of 439 cents per share was declared, up 20.6%, bringing the total dividend for the year to 876 cents.

Group revenue grew 15% to R114.9bn, with recent acquisitions boosting the growth rate by 2.3%.Trading profit grew by 17.6% to R11.4bn.

The Freight terminal operations benefited from elevated bulk commodities demand as well as positive price mix augmented by healthy clearing and forwarding activity.

The turnaround in Financial Services exceeded management expectations, and the return of travel and tourism-related activity manifested in strong growth reported by Services South Africa.

Consistent hygiene pool growth, strong consumable sales and new contract wins culminated in growth off the extraordinary 2022 base in Services International.

Branded Products delivered another strong result as the division navigated significant input cost pressures, whilst Automotive’s margin focus supported delivery of a record result for the division.