NZINGA QUNTA: The Bidvest Group’s trading profit grew by 24.8% to R5.1 billion, and R1 billion of that was earned internationally over the six-month period ended December 31, 2021. Bidvest CEO Mpumi Madisa joins me. A very good evening to you. Thanks so much for your time on SAfm this evening. All divisions reported double-digit trading-profit growth. How was this achieved, especially in quite a challenging environment?
MPUMI MADISA: Good evening, and thank you very much. Good evening to all your listeners. We are very fortunate. We’ve presented a remarkable set of results, all six cylinders firing. Maybe just to highlight probably three or four areas where results were boosted, the first area is in relation to the maize-export programme. We are smack in the middle of our maize-export programme and in the first half of the year we handled about 1.3 million tons of maize. That was a significant contribution, in particular, to our freight division.
The second aspect of it is market-share gains. We’ve really seen significant market-share growth across most of our divisions. Just to contextualise it in South Africa, we made no acquisitions. The South African growth is all organic, not boosted by acquisitions at all, so there are significant market-share gains from a South African perspective.
Thirdly, we have seen an increase in volumes back into the office, which has been great. We’ve been waiting for this for two years. So there are structural shifts that we were backing within the prior year that have come back. So our businesses that provide products and services into offices performed better, much better than the prior year. Also linked to Covid travel restrictions and so on we’ve seen an easing. International travel is not back yet, but certainly domestic travel has been strong, and so our businesses that were down last year because of those Covid-related impacts have come back very strongly.
And then lastly, we did four acquisitions in the prior year. We concluded those acquisitions in the fourth quarter of the 2021 financial year. We’ve now had a full six-month contribution from those acquisitions.
NZINGA QUNTA: Mpumi, you’ve attributed these strong results in part to decentralised leadership and team structures.
MPUMI MADISA: Yes. The magic of Bidvest is really our decentralisation and our diversification, so we do have decentralised management teams. We’re very entrepreneurial. Our teams do operate and they’ve got autonomy, but we obviously do have a governance framework within which they operate. That’s really enabled us to be flexible and agile during this period. You can see the strong entrepreneurial flair coming through in the results.
And then obviously decentralisation. We touch so many parts of the economy, we touch so many industries and if generally there’s a partner that’s not performing, we have other industries that are performing. So our diversified portfolio really gives us a lot of strength.
NZINGA QUNTA: Of the R5.1 billion trading profit, R1 billion was earned internationally. Talk to me about how the issuance of that US$800 million international bond kind of bolsters your financial capacity. Also, you’re looking to grow internationally. How are you planning to drive this strategy one month from now?
MPUMI MADISA: Yes, we raised $800 million on the international bond market. We’ve used about $500 million of that, just under that, to pay off debt both locally and offshore. So in terms of fire power for offshore acquisitions we are sitting now with about £372 million, and that’s a kind of, I suppose, war chest that we have. That doesn’t take into consideration untapped facilities that we have in South Africa.
How we go about that? We announced a restructure of the services division, which is really important to talk to our offshore growth strategies. We’ve identified three niche areas for international expansion, facilities management, hygiene and plumbing and related. Just in terms of the two areas of focus, FM and hygiene, those sit in our services division.
What we’ll be doing – and this is effective April 1 – is to have services international business whose sole focus is going to be on expanding our facilities management and hygiene operations offshore. We’ve made that division leaner. It now has capacity to absorb more businesses, and that management team now also has the capacity and the flexibility to be able to run. We’ve got a very nice pipeline and we’re going hopefully to see some corporate activity in the second half of the year.
NZINGA QUNTA: All right. There was a sense of optimism about demand and economic recovery, people going back to offices. Something that Bidvest has also spoken about was tenders. Now we are seeing reports that South Africa’s National Treasury DG, director-general, has asked all state organs not to advertise new tenders. How will that affect that kind of momentum that you’ve spoken about and you were excited about?
MPUMI MADISA: This is not known, but less than 5% of our revenue comes from the public sector.
NZINGA QUNTA: Okay.
MPUMI MADISA: More than 95% of our revenue is private-sector driven. There are key public-sector opportunities that we would go for. I hear what the DG is saying, which I hope will not close down those opportunities for triple-B, because we need to invest in the country. We need to invest in infrastructure projects. Certainly from a Bidvest perspective we’ll open, we want to co-invest. I just hope that that decision that he’s made doesn’t close that off because that’s important – not just for our own personal growth, but just in terms of boosting the economy and creating more jobs.
NZINGA QUNTA: Thank you so much for your time this evening. Bidvest CEO Mpumi Madisa joined me to talk about the group’s results.