The group has seen ‘broad demand’ for its renewable energy products. Image: AdobeStock
Load shedding has been a mixed blessing for Bidvest. It has driven up factory operating costs on the one hand, but also prompted a five-fold increase in demand for renewable energy products over the past year.
That much is clear from the half-year results to end of December 2022, published on Monday.
The downside of load shedding is that sales of electrical appliances are down, leaving retailers with surplus stock, while demand for renewable energy equipment is booming.
Bidvest group chief executive Mpumi Madisa says the decision to step up the renewable energy business during the last two years was well-timed, as reflected in the exponential growth in revenue in the Commercial Products division over the prior first half reporting period.
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“The demand for renewable energy products is very broad, from residential property owners, to businesses and those providing renewable energy installations, to name a few,” she says.
Commercial Products posted a 17.% growth in trading profit to R725.7 million, a performance made more impressive by the lack of public sector infrastructure spending over the last year.
Both the Freight and Branded Products divisions posted trading profits of R1.1 billion apiece, though Freight’s profit, up 31.5% on the prior year period, was particularly impressive given the well-publicised problems with Transnet’s Freight Rail division.
Bidvest’s Freight division is capable of handling 3.5 billion litres of bulk product daily through its storage capacity in Durban, Richards Bay and Isando.
This meant the bulk of cargo had to be moved by road, resulting in some handling inefficiencies, and increasing the need for truck staging areas to alleviate congestion.
The demand for bulk minerals and liquid petroleum gas (LPG) through Bidvest’s terminals remained high, with higher activity in the automotive sector and new business boosting clearing, forwarding and warehousing activities. A decline in maize volumes was partly offset by the increase in wheat, rice and sorghum imports, as well as soybean exports.
The biggest division is Services, which contributed a half-year trading profit of R1.6 billion.
Services provided in SA include cash management, vehicle tracking, security and guarding, cargo services and warehouse management.
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The international services offered include hygiene, cleaning and waste control. As office occupancies increase in the post-Covid environment, demand for some services improved, though a reduction in customers’ real estate footprints and the discontinuation of some state-sponsored programmes in the UK posed challenges.
Travel and tourism activity is almost, but not quite, back to pre-Covid levels, both for international and domestic travellers. That is reflected in the results for Services South Africa.
Overall, group revenue was up 14% to R57.2 billion over the prior year period, and trading profit increase 14.5% to R5.8 billion.
The business operations generated R7.3 billion in cash, with R5.5 billion invested in working capital.
An interim dividend of 437 cents was declared, an increase of 15% on the prior year period.
Looking forward, Madisa says activity in renewable energy, mining, agricultural, tourism and hospitality-related sectors is expected to remain healthy.
Planned investments into alternative energy to circumvent the load shedding crisis will continue. On the downside, consumer disposable income will remain under pressure.
For the Freight business, there is no sign of let-up in demand for certain bulk commodities, and that will keep Bidvest’s terminals busy in southern Africa.
This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.
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