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Bidvest Sees Double-Digit Earnings Growth in Ailing Economy

March 04, 2013

Bidvest Group Ltd. (BVT), a South African industrial company with interests from cleaning to car sales, estimates it will maintain double-digit earnings growth in the second-half as economic growth improves in 2013.

January and February delivered better trading results than the previous two months, Chief Executive Officer Brian Joffe said in a phone interview today from Johannesburg. “We are optimistic to have decent results” for the six months through June, with double-digit growth, he said.

So-called normalized earnings per share excluding one-time items increased 18 percent to 7.25 rand for the six months through December, compared with 6.13 rand a year ago, Bidvest said in a statement. Revenue climbed 12 percent to 75.4 billion rand ($8.3 billion).

Rising unemployment and weaker consumer spending reduced demand for many of Bidvest’s services in South Africa, which accounts for about 45 percent of total sales. Labor unrest in the mining, transport and farming industries contributed to a decline in South African economic growth to 2.5 percent last year from 3.5 percent in 2011.

The “economic climate is a little better” than last calendar year, Joffe said. Calls for higher wages will probably affect costs and above-inflation salary increases are the “only risk” that could put pressure on margins, he added.

Bidvest shares closed 0.1 percent lower at 240.20 rand in Johannesburg after reaching a 22-year high last month. The stock has rallied 11 percent this year, compared with a 1.5 percent advance in the 165-member FTSE/JSE All Share Index. (JALSH) The company has a market value of 78.6 billion rand ($8.7 billion).

Bidvest said in November it offered to buy the shares in household appliance maker Amalgamated Appliance Holdings Ltd. (AMA) it didn’t already own. Further acquisitions of about 10 billion rand are “easily achievable,” Joffe said. The company completed a deal in Chile last year and also owns fish processor Seafood Holdings in the U.K.

The interim dividend was raised 16 percent to 3.24 rand.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at

To contact the editor responsible for this story: Simon Thiel at

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