Headline earnings per share at South Africa‘s Bidvest fell by 3.9% in its first-half after new international accounting standards and a write-off of money owed by struggling South African Airways (SAA).
Bidvest, whose businesses spans freight, automotive, aviation services and office and print, said normalised headline earnings per share (HEPS) for the six-months ended Dec. 31 were 610.9 cents compared with 635.7 cents in 2018.
Excluding the effects of the IFRS 16 accounting change, normalised HEPS rose 0.1%, Bidvest said in a statement.
Bidvest, which owns 27.2% of airline operator Comair , said it had taken a share of Comair’s impairment of the SAA settlement owed to it.
In February, Comair, which operates low-cost carrier Kulula.com, said SAA had breached the terms of a R1.1 billion settlement agreement after it was placed under business rescue, resulting in Comair writing that claim off.
Trading profit increased 19.8% to R4 billion, while revenue grew 9.2% as a result of the consolidation of drugmaker Adcock Ingram.
Bidvest increased its stake in Adcock to 52.3%, resulting in it being consolidated into its Branded Products division from August 1. However, this was neutral on headline EPS.
Services, its biggest business, grew trading profit by 15.4%, bolstered by a margin lift in management services group Noonan, acquisitions and leisure travel.
Freight, which CEO Lindsay Ralphs described as always being one of the group’s “stalwarts”, disappointed as lower agricultural exports, specifically yellow maize due to weak crop output, and general cargo volumes offset increased bulk and liquid commodity volumes. Trading profit contracted 9.3%.
“During the six months to December 2019, Bidvest’s domestic operations held their own in a tough trading environment characterised by low business confidence and constrained consumer demand culminating in lower volumes,” the firm said, adding that offshore service businesses performed well.
Ralphs said in a media conference call that the coronavirus outbreak was number one on Bidvest’s risk profile, with a lot of its products imported internationally.
“If they are not imported directly from China, a lot of the raw materials are made in China,” Ralphs said.
“We do have quite significant facilities of stock at the moment so there is no imminent short-term problem with regards to inventory levels. We’re making every possible contingency plan to ensure that it doesn’t disrupt our business,” he said.
Bidvest’s business is 35% product driven, with tools, equipments, plumbing material and some components of the automotive business made in China, but not a huge portion, he added.