Renewable product sales jumped 10-fold over the last year, while the Freight division made record profits. From Moneyweb.
Bidvest’s results offer unique insights into the corners of the broader SA economy. Two divisions making roaring profits at the expense of dysfunctional state-owned companies are Commercial Products and Freight.
One thing that jumps out in the latest Bidvest results for the year to June 2023 is the 10-fold increase in sales of renewable products over the previous year.
This is admittedly coming off a small base. A year ago, many South Africans naively believed load shedding was probably a temporary phenomenon. They were rudely disabused of that idea as the year progressed.
“Our exponential growth in renewable products is really the story of Eskom and its underperformance,” says CEO Mpumi Madisa.
“Demand for renewable energy products such as solar panels, inverters, sub-stations and other equipment is evident in our electrical division, and this is happening right across the country.”
Bidvest reported a fivefold increase in demand for renewable products at the halfway stage to December 2022. That accelerated in the second half of the year, as Eskom’s malfunctioning operations continued delivering windfall profits to solar energy system importers and distributors. The other side of load shedding is the increased costs to factories, homes and businesses.
The renewables frenzy helped the Commercial products division achieve a trading profit of R1.4 billion, up 21.4% on the previous year.
Freight
Transnet Freight Rail’s well-publicised problems were a gift to Bidvest Freight – and neighbouring ports. Bidvest’s Freight division delivered a record trading profit of R2.2 billion, double its contribution of three years ago. The business can handle 3.5 billion litres of bulk product daily through its storage capacity in Durban, Richards Bay and Isando.
In times past, most of the freight to these terminals was delivered via rail. Last year, everything came by road. Not a cent was paid to Transnet for rail deliveries.
Read: Transnet dagger pointed at the heart of SA’s economy
The volume of bulk agriculture and liquid commodities handled by Bidvest Freight was flat in SA, though demand for mineral products was up, particularly in the neighbouring country ports, as exporters redirected cargo flow due to infrastructure challenges in South Africa.
Double-digit growth
“What is most satisfying is that we delivered double-digit growth in trading profit through organic growth alone, without including acquisitions, and this in a local and international environment of weak economic growth and high inflation,” says Madisa.
Services International had a superb second half, lifting trading profit for the year by 9.8% to R3.4 billion.
Financial Services had a four-fold increase in trading profit to R463.5 million. Automated and Branded products increased trading profit by 11.7% and 15.5%, respectively.
“Seven of our divisions reported double-digit trading profit growth off already-high bases. This is commendable considering the weak and volatile macro backdrop,” says Madisa.
Going forward, it’s unlikely that renewable energy product demand will sustain the kind of growth rates Bidvest saw over the last year, but the point of a diversified portfolio of assets is to keep the total business on an even keel. Last year’s results show the wisdom of this philosophy, as virtually every aspect of the business delivered in spades.
Overall revenue was up 15% to R114.9 billion, and trading profit for the group was up 17.6% to R11.4 billion.
