Bidvest grows despite I-Fusion`s impact

By Iain Scott, ITWeb group consulting editor

Johannesburg, 28 Aug 2001

Investment holding company Bidvest has reported full-year earnings at the lower end of analysts` expectations, partly due to poor results from technology company I-Fusion Holdings.

However, Bidvest chairman Brian Joffe says the group has done well given the current trading environment.

Joffe says I-Fusion`s disappointing performance had a negative effect on Bidvest`s earnings, reducing its earnings per share by about 2.8c.

Bidvest reported headline earnings of 365.4c for the year to 30 June 2001, compared with 310c the previous year.

Joffe says the 17.9% growth in the group`s headline earnings per share is largely due to organic growth.

Bidvest agreed in May last year to buy 60% of I-Fusion, and announced this year that it intends to acquire the entire share capital of the company.

"World economic growth slowed down towards the end of last year, and the South African economy has not and will not be exempt from the negative consequences," Joffe says. "Import volumes dropped and weaker international demand negatively impacted on export volumes.

"However, the depreciating rand helped soften the blow."

He adds that business conditions in SA "were extremely tough although we did see a slight improvement in the third quarter of the review period".

Bidvest has reclassified its activities into three umbrella divisions - services, foodservice products and commercial products, although Joffe says the reclassification serves only to provide a better understanding of the operations, without changing the management focus and without the intention to unbundle.

"Bidvest is a South African company, dedicated to its roots and committed to continue growing its activities in SA," he adds. He says that despite competition legislation, there are still significant growth and acquisition opportunities locally.

"We believe that foreign listings are suitable for foreign activities and that it is not appropriate to list primarily local assets offshore. Consequently we will maintain our JSE listing."

However, he says the aim is for each of its umbrella divisions to be truly international, using critical mass locally to drive ongoing expansion. The benefits of its globalisation strategy will flow back to SA, he adds.

Bidvest is planning to increase its international shareholder base, as it believes its shareholders should reflect the geographical spread of its operations as it globalises.

"With lower levels of South African inflation and a subdued outlook for the South African economy, corporate growth rates are likely to be more modest. In all likelihood the Bidvest of tomorrow may look quite different from the Bidvest of today," he adds.

The Bidvest share was trading 45c lower at R47.15 on the JSE in midmorning trade today, after rising 40c yesterday.