Food services group Bidcorp said on Tuesday its major markets were showing a decline in volumes of between 45% to 70% as hotels, restaurants and pubs remain temporarily closed to curb the spread of the coronavirus.
The company, which has operations in Europe, Australasia and emerging markets like greater China and Africa, said trading for the nine months to March 31 had held up reasonably well and was broadly in line with expectations.
But Bidcorp also said the full effects of the virus across many of its operations only appeared in the second half of March and the full impact would become evident from April onwards.
All the company’s businesses have been designated as essential services and have continued operating in all the countries where it has a presence. But demand for food products has fallen substantially in many discretionary spend areas, particularly across hotels, restaurants, pubs, leisure and travel related businesses.
To mitigate this, Bidcorp is seeking new sales opportunities such as supplying food into retail environments, direct to customers via ecommerce platforms, home delivery and different government initiatives like quarantine centres, it said.
In China, the company is seeing “a very encouraging and quick bounce back in demand”, and its volumes are quickly approaching the levels of a year ago.
Bidcorp said it had temporarily stood down and furloughed some staff and the board and executive management are taking a 30% reduction in fees or salary for the fourth quarter of the 2020 financial year to save costs.
“There is quite a bit of fluidity regarding various government wage assistance schemes in respect of eligibility, timing and coverage. We are doing our best to access these in all countries where we qualify,” Bidcorp said.
All its businesses have also implemented salary reduction measures and the company is negotiating property rental reductions as well as not hiring trucks, relying instead on the trucks it owns.
“We believe the group has sufficient liquidity for the foreseeable future in terms of headroom and we are working with our banking partners to further increase liquidity,” Bidcorp said.
As at March 31, the group has available to it headroom and facilities of 425 million pounds ($533.50 million), which is in addition to its existing net debt, it said. Total net debt at December 31 was R4.9 billion ($268.90 million).