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| Review of operations – Bidfood continued |
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| BIDFOOD INGREDIENTS |
Crown Foods Group recorded pleasing growth in revenue and trading profit, but Bidbake’s performance continued to disappoint. Bidbake achieved some turnover growth, but margin pressure intensified. Remedial action was taken. Two operations were closed and production from Bidbake’s KwaZulu-Natal factories was consolidated at Longmeadow, Johannesburg. The yeast production and bakery supplies businesses were separated, while the food technology unit became a subdivision. The new Bidfood Ingredients structure became operational in April.
Overall revenue at Bidfood Ingredients rose to R1,25 billion, an increase of 9,2% while trading profit of R98,6 million was recorded.
Macro conditions were supportive, though competitive pressures grew. Performance was also affected by the disruptive effects of relocation to modern premises at Longmeadow.
The reorganisation houses all food ingredient businesses within a single structure and creates opportunities for supply synergies across the food industry while optimising our managerial resources.
Recent capital expenditure on manufacturing and warehousing facilities is expected to yield significant efficiencies while the establishment of a well-resourced food technology business strengthens our position as a product design innovator.
Increases in food inflation have tended to heighten our competitive advantage. The progression from food deflation to food inflation accentuates the need among our customers for smart solutions that contain costs or add to product appeal. As the industry’s food technology partner we are ideally placed to respond.
Our Microsafe food safety programme is the industry benchmark for microbiological and chemical analysis and laboratory evaluations. Microsafe has developed a comprehensive HACCP programme and has created a strong technical services arm to support our customers. In 2007, a further R10 million was invested in food safety.
New product development and innovation are supported by alliances with international partners. We are sole distributors across southern Africa for the world leaders in meat processing, vacuum-packaging and other equipment.
The Group’s Proudly Bidvest image is being leveraged to reinforce the positioning of Bidfood Ingredients as the pre-eminent national player in our industry. Bidvest’s reputation as a BEE pacesetter is increasingly important to us and we will seek new BEE ratings in 2008.
In the coming year, the benefit of corrective action will be increasingly felt as will the investment in new facilities in both Johannesburg and Cape Town. Crown Foods is well positioned to derive advantage from largely favourable macro conditions. The yeast manufacturing and bakery supplies businesses have already benefited from tighter focus. Improved performance is anticipated. Bid Bros, the cash-and-carry concept announced last year, will be strongly supported and will roll-out nationally. |
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Bidfood Ingredients will continue to seek distribution synergies and look to optimise the cross-selling opportunities created by the new structure. Growth in both revenue and trading profit will be energetically pursued. |
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