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| Chief executive’s report continued |
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| International perspective |
Trading profit from our foodservice businesses in the United Kingdom was disappointing. However, operations in continental Europe continue to improve. Higher interest rates, stronger inflation and changes to the business mix created some challenges for the United Kingdom operation, but higher growth in Belgium and the Netherlands contributed to improved performance by their revitalised management teams. The acquisition of the largest foodservice business in Flanders will further strengthen our Belgian business. We are now the number one player in the Belgian foodservice market. Substantial growth is, albeit relatively small in the Bidvest context, continuing in the hospitality industry in the United Arab Emirates.
The Australian economy continues to benefit from the global commodities boom and Bidvest Australia has again registered strong growth. The acquisition of the Angliss foodservice businesses in Singapore, Hong Kong and the People’s Republic of China creates an exciting platform in these high growth markets in Asia. The New Zealand economy remains flat, but solid growth is being achieved by our operations.
Bidvest’s foodservice business remains the largest player in its industry outside of North America. |
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| African perspective |
Within the South African market, strong growth is being maintained and new jobs are being created. The national outlook remains positive, giving grounds for hope that our political “miracle” may yet be followed by an economic one.
However, inflation has increased and we witnessed a succession of interest rate rises as the authorities became increasingly concerned by the record level of household debt.
Within the South African market, inflation increased while we witnessed a succession of interest rate rises as the authorities became increasingly concerned by the record level of household debt.
The cumulative impact was first felt in November and December 2000, and by year end businesses with direct consumer exposure were under some pressure.
The implementation of the National Credit Act also contributed to a slowdown in new vehicle sales. A decline in the number of hire purchase agreements may be attributable to the bedding-in of unfamiliar procedures, but I suspect that we may be seeing the first stages of a fundamental shift in credit-based trading volumes within the consumer sector.
Though consumer markets came under pressure, South Africa’s gross domestic product continued to grow at a healthy rate as the national strategy of encouraging greater fixed investment gained momentum. Business confidence remained high. South African imports continued at a high level, partly as a result of higher fixed investment, putting pressure on the rand. The overall effects for Bidvest were positive as exchange rate trends helped to swell profits from international operations.
Many jurisdictions within southern and central Africa – with the notable exception of Zimbabwe – are engaged in a process of long-term economic reform. Foreign investment has picked up, economic growth is being sustained and trade volumes are beginning to increase. Afro pessimism has been replaced by optimism, even in some international investment centres.
We increased our stake in Namsov Fishing Enterprises in Namibia and strengthened the business through the complete acquisition of Namsea. Poor catches limited earnings growth.
In South Africa, low agricultural volumes affected the financial performance of Bidfreight. At our food ingredients businesses, corrective action and a back-to-basics approach are expected to lead to an improvement in results in the forthcoming year. Bidvest Industrial and Commercial Products optimised a supportive macro-economic environment and achieved strong growth. Contract delays early in the year affected the overall performance of Bidpaper Plus despite new business successes later in the year. Intense competition and the impact of interest rate increases affected trading income from our automotive business while volumes at year end were also impacted by the NCA implementation. Vehicle recall and impairment costs at GAZ SA were also negative for the business. |
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| Bidvest structures |
Our two most significant structural changes involved Bidvest Australasia and Bidfood.
Strategic growth into Asia and the alignment of these operations within Bidvest Australasia promoted a name change to Bidvest Asia Pacific.
During the Angliss consolidation, Bidvest Asia Pacific will remain on a growth footing in all markets – Australia, New Zealand and Asia. Our decentralised business model empowers local management while encouraging a search for synergies and operational efficiency. The approach will now be extended to Asia.
Bidfood operations have been refocused, and reshaped management teams have taken the helm. Bidfood now comprises three focused divisions: Caterplus, Bidfood Ingredients and Speciality. The ingredients division became operational in April following a reorganisation that houses all food ingredient businesses within a single structure. A unified management structure has been adopted at Caterplus, integrating the management of our dry food and frozen food services. Lufil, the paper products business, has been incorporated into Bidpaper Plus, Hotel Amenities and Accessories is now part of Bidserv and Vulcan Catering Equipment part of Bid Industrial and Commercial Products. |
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| Succession success |
| The structural changes reflect the strength of Bidvest’s managerial resources. Energetic leadership teams have taken responsibility without recourse to external recruitment. There is a knock-on effect down the reporting lines as younger people move into positions of responsibility. Bidvest’s “founder-generation” of owner-managers is being replaced by entrepreneurial executives who have been developed internally. This “changing of the guard” is evident across all our businesses and brings further impetus to our transformation strategy. |
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