Bidcorp says coronavirus will impact second half

Coronavirus to impact growth prospects.
Image: Moneyweb

Food services firm Bid Corporation (Bidcorp) said on Wednesday it expected the coronavirus outbreak to impact growth prospects into the second half of 2020, along with “recent political and social upheaval” in Hong Kong, Chile, Australia and the UK.

Bidcorp’s greater China operations are battling with negative impacts from social unrest in Hong Kong and Macau as protests impacted consumption and tourism. Out-of-home eating was hard hit and sales in Hong Kong and Macau dipped in the six months to December 31.

While operations in mainland China saw continued growth in the first half, chief executive Bernard Berson expects the coronavirus outbreak, which has killed more than 2 000 people there, to impact growth prospects into the second half.

“The big issue that none of us really have the answers to is what the impact of coronavirus will be,” Berson told Reuters in a telephone interview. “The more immediate impact is clearly on demand. People aren’t going out to restaurants and hotels and aren’t travelling. There will be some supply chain disruptions but I don’t believe that will be long term impact.”

The company reported a 4% increase in half-year headline earnings, as strong performances of its businesses in Europe, New Zealand and the Middle East outweighed weaker operations elsewhere.

Headline earnings per share (HEPS) from continuing operations rose to 728.3 cents in the six months to December 31 from 700.2 cents in the year-earlier period. The company’s earnings were impacted by the adoption of accounting standard IFRS 16.

Net revenue rose 3.2% to R68.2 billion ($4.55 billion), while trading profit grew 9.2% to R3.6 billion.

Revenue from the Europe division rose 4.1% to R23 billion, while the business’ trading profit jumped 12.2% to R1.1 billion.

“Europe continued to perform well, particularly Netherlands, Czech and Slovakia, Italy and Poland,” Bidcorp said.

In New Zealand, sales rose and profit were slightly ahead of expectations, even as volumes fell due to the exit of a large catering contract in July, Bidcorp said.

“Operating conditions were challenging in a number of geographies,” the company said. “Social unrest in Hong Kong and Chile impacted out-of-home demand, the bush fires in Australia dampened consumer sentiment while the lead-up to the UK general election and Brexit-fatigue dampened British consumer spending.

In addition, trading performance was impacted by management underperformance in Bidfresh UK, Spain and Germany.”

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